University of PhoenixKudler Fine Foods, a privately held company, is an upscale specialty food store. The organization includes three locations in the San Diego metropolitan area, La Jolla, Del Mar, and Encinitas. The three retail buildings have approximately 16,000 square foot each, all of which are located in high quality shopping centers. Kudler Fine Foods now wanting to expand its business operations faces a difficult decision to go public through an IPO, acquire another company in the same industry, or merge with another organization.
Mergers and acquisitions are virtually the same type of business transaction. According to investopedia.com the one difference in a merger and an acquisition is how the purchase is communicated to the board of directors, employees, and shareholders. Another difference between a merger and an acquisition is that an acquisition will always involve one firm purchasing another and there is no exchange of stock. A reverse merger can also occur which is known as an acquisition.
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The Initial Public Offering (IPO) Prospectus for A...This type of acquisition allows a private company to become publicly listed in a short period of time. In this case the private company will buy a public company with no business. When the private company does a reverse merge into the public company the two businesses become a new public organization with tradable stock.
In the world of business it is common for companies to merge for various reasons. Reasons that mergers happen are mostly identified for getting better profits, two smaller companies becoming one larger company, or just one company needing financial security from another company. Even though these events are usually called mergers and acquisition, the slight difference between the two words is the reasons behind them. Mostly, acquisition is a larger, profitable company taking over another, where as mergers are two companies deciding to become...