Difference between Merger, Acquisition and Joint Venture

There is the main difference between collaboration of firms which can be called as merger, joint venture and acquisition. In first type; merger, two different organizations get to be distinctly one organization whereas in joint venture two different organizations plan to get particular objective. In acquisition, an organization acquires the charge by purchasing the assets of another company.

Merger

A merger is an arrangement to join two existing organizations into one new organization. Most mergers join two existing organizations into one recently named organization. Mergers are exchanges where the ownership of organization are exchanged or consolidated. From a legitimate perspective, a merger is a lawful union of two substances into one element

Acquisition

A takeover or acquisition is the buy of one organization or business by another organization or different business entity. Particular acquisition objectives can be recognized through a horde of roads including research on market, exchange expos, or sent internal units, among others. Such buy might be of 100%, or almost 100%, of the ownership value or assets of the acquired business.

Joint venture

A joint venture is an entity made by at least two gatherings, by and large described by shared possession, returns, risk and administration. Organizations normally seek after joint ventures for the given four reasons: to get to another market, especially developing markets; to pick up scale efficiencies by consolidating resources; to low risk for real speculations; or to get to skills.

Merger VS Acquisition VS Joint Venture

In the following article we are going to discuss the contrasts between three types of collaborations in business so that we can get clear understanding about this.

  • Meaning:

Merger implies the combination of at least two organizations to frame another organization.

Acquisition implies that one organization buys a business of other organization.

In a joint venture, the two organizations will independently exist all alone, and another different entity might be shaped for the specific objective.

  • New entity:

In merger, formation of new organization is optional. When two companies merge, they might make a new company to work or dissolve any one company.

In acquisition, no formation of new entity is there.

In joint venture, new entity formed for some particular target.

  • Decision:

In merger, decisions making is based on mutual understanding.

In acquisition, hostile and friendly decisions are done in acquired or acquired organizations.

In joint venture, mutual decisions are made for particular objective.

  • Members:

In merger, minimum number of organization to carry out this process must be 3.

In acquisition, minimum number of organizations to carry out this procedure is almost 2.

In joint venture, there is no limitation for minimum and maximum number of organization but this is acceptable that there must be 2 organizations.

  • Purpose:

The main purpose of merger is to decline competition and enhance operational efficiency.

The main purpose of acquisition is to increase the instantaneous development.

The main purpose of joint venture is to achieve a special objective.

Conclusion

From the above article we can conclude that in merger, there is collaboration of two organizations and in acquisition there is takeover on assets of other organization whereas in joint venture, organizations make a new entity to carry out the particular target.