Category: Fundamentals

Core concepts: what mergers and acquisitions are, the parties involved, and the strategic rationale behind deals.

15 articles in this category.

• Acquisition — The purchase of one company, or its assets, by another that gains control.
• Add-on acquisition — A smaller business acquired by an existing platform company. Also known as a tuck-in or bolt-on; commonly used by private equity to expand a portfolio company.
• Carve-out — A partial divestiture in which a parent sells a minority stake in a subsidiary to outside investors via an IPO, while retaining a controlling interest.
• Consolidation — A combination in which two firms join to form a new third entity, distinct from a merger in which one company survives.
• Divestiture — The sale, spin-off or other disposal of a division, subsidiary or asset by a parent company.
• Joint venture — A new business entity owned by two or more independent companies, used to share costs, capabilities or market access without a full merger.
• Merger — The combination of two companies into a single surviving legal entity.
• Mergers and acquisitions — The umbrella term for transactions that combine the ownership of companies or their assets, and the multi-stage process by which those transactions are negotiated and closed.
• Platform acquisition — The first acquisition in a roll-up — typically larger, professionally managed, and used as the operational base for subsequent add-on deals.
• Reverse merger — A transaction in which a private company becomes publicly traded by merging with an existing public shell company, bypassing the traditional IPO process.
• Roll-up — A consolidation strategy in which a buyer acquires many small firms in a fragmented industry to build scale, multiple-arbitrage value and market position.
• Spin-off — A divestiture in which a parent distributes the shares of a subsidiary to its existing shareholders, creating a separately listed company.
• Strategic alliance — A non-equity cooperation agreement between independent firms — for example a co-marketing, supply or licensing arrangement — distinct from a joint venture or M&A.
• Synergy — The extra value a combined company can create beyond the sum of the two firms apart.
• Types of mergers — Classification of mergers by the economic relationship between the combining firms.