Define a merger:

Define a merger:

• A. One firm buys another
• B. The owners of two separate businesses agree to join together and form a new organisation
• C. Two unrelated companies combine
• D. A company splits into two

Answer: (B)

A merger happens when two owners decide to join together and form a single new organisation. The key idea is mutual consent to combine and create one entity, with shared ownership and control, rather than one firm taking over another or the business splitting apart. This is different from an acquisition, where one company buys another and the acquired firm often becomes part of the buyer rather than forming a new jointly owned entity. It’s also different from a split, where a single company breaks into two or more separate entities. While two businesses that are not closely related could merge, the defining feature remains the decision to combine into one new organisation with common ownership.

A merger happens when two owners decide to join together and form a single new organisation. The key idea is mutual consent to combine and create one entity, with shared ownership and control, rather than one firm taking over another or the business splitting apart.

This is different from an acquisition, where one company buys another and the acquired firm often becomes part of the buyer rather than forming a new jointly owned entity. It’s also different from a split, where a single company breaks into two or more separate entities. While two businesses that are not closely related could merge, the defining feature remains the decision to combine into one new organisation with common ownership.