Mergers and Acquisition:

Merger and acquisition (M& A) is a general term used to refer to the consolidation of companies. But specifically, a merger is the amalgamation of two or more firms to form a new company. It is a voluntary union in which the parties involved hope for the improvement of their current level of operations and profitability. On the other hand, an acquisition is the purchase of one company by another in which no new company is formed.

Under acquisition arrangement the first firm usually put in a takeover bid- offering to buy the share of the second for cash, to swap them for shares in the acquiring company, or to issue fixed interest securities (debentures). The shareholders of the second firm then vote on whether or not to accept the offer (Sloman, 2003).

It has been generally observed that merger and acquisition transactions provide companies with important mechanisms for adjusting to challenges and opportunities in an ever changing business environment.