MergervsAcquisition
The two words get used almost interchangeably in the press, but the legal, tax, and governance mechanics are meaningfully different.
The one-sentence difference
A merger is a legal combination where one entity survives and the other ceases to exist. An acquisition is one entity purchasing another — the acquired entity may continue to exist as a subsidiary.
Side-by-side
| Dimension | Merger | Acquisition |
|---|---|---|
| Legal outcome | One entity survives; the other dissolves | Buyer takes ownership; target may continue as subsidiary |
| Consideration | Typically stock (share exchange) | Cash, stock, or a mix |
| Board approval | Both boards + shareholder vote | Buyer board; target board + shareholders |
| Regulatory filing | HSR + state filings + shareholder proxy | HSR + state filings; proxy if public |
| Tax treatment | Frequently structured for tax-free treatment (§368) | Taxable event by default; §338(h)(10) or similar for step-up |
| Governance post-deal | Combined board, often "merger of equals" language | Buyer's board controls; target management may or may not stay |
| Press framing | "Merger of equals" (rare and usually not equal) | Explicit buyer/seller relationship |
When to use which
Two similarly-sized public companies combining via stock swap where the strategic pitch requires "shared future" language. Also used when tax-free treatment is worth engineering.
Full article on Merger →Almost every private-company transaction. The buyer pays money (or issues securities); the target sells. Cleaner ownership, cleaner tax outcomes for the seller.
Full article on Acquisition →What they have in common
Both fall under merger control (antitrust) rules. Both require the same core diligence and definitive-agreement work. Legally, in the U.S., statutory mergers and stock acquisitions are both governed by state corporate law and Section 251 (Delaware).
Frequently asked
Are true "mergers of equals" common?
No. Almost every transaction the press calls a "merger" is actually an acquisition dressed in shared-language terms. In real M&A, one party is buying the other, and the shareholder split at close reflects that.
Is my business sale a merger or acquisition?
Almost certainly an acquisition. The buyer is paying money for your equity or your assets. "Merger" would only apply if you and another company combined and the surviving entity was owned proportionally by both former shareholder groups.