Merger vs. Amalgamation — What's the Difference?
By Tayyaba Rehman & Urooj Arif — Updated on May 14, 2024
A merger involves the combining of two or more companies into a single entity, typically with one surviving organization, while amalgamation results in the formation of a completely new company from two or more merging companies.
Difference Between Merger and Amalgamation
Table of Contents
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Key Differences
In a merger, one or more companies are absorbed by another existing company, which retains its identity and typically becomes the surviving entity. This means that the brand and operational structure of one company continue to lead. In contrast, in an amalgamation, all companies involved cease to exist independently, leading to the creation of a totally new entity, with a new corporate identity and structure.
Mergers are often strategic, aiming to increase market share, reduce competition, or expand into new areas. This type of corporate restructuring is usually between companies of differing sizes where a larger company absorbs a smaller one. Whereas amalgamations are more about equality, where companies of similar sizes combine to pool resources, share technology, and capitalize on synergies, often creating a stronger entity than the original companies could be on their own.
Financially, in a merger, the acquiring company assumes the assets and liabilities of the merged company, which can be straightforward in terms of integration. On the other hand, in an amalgamation, the financial structures of the involved companies are completely integrated into a new set, which might involve a more complex process of valuation and the issuance of new shares.
Mergers can be categorized into different types such as horizontal, vertical, and conglomerate based on the relationship between the merging entities and their business activities. Amalgamations do not typically have such categorizations since they always result in the formation of an entirely new company regardless of the companies' previous business relationships or industries.
The legal implications of mergers usually involve the dissolution of the other company without the process of liquidation, whereas amalgamations involve the legal dissolution of all original companies, which then reform as a new legal entity. This can often require more comprehensive agreements and regulatory approvals.
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Comparison Chart
Definition
Two or more firms combine, with one surviving.
Two or more firms combine to form a new entity.
Entity Survival
One company survives; others absorbed.
No original company survives.
Financial Integration
Acquiring firm assumes assets and liabilities.
Complete integration and valuation of all assets and liabilities.
Complexity
Varies, generally simpler than amalgamation.
Usually more complex due to formation of new company.
Legal Process
Involves absorption and possibly asset transfer.
Involves dissolution and re-establishment as a new legal entity.
Compare with Definitions
Merger
Leads to consolidation within an industry.
A merger in the automotive industry can reduce the number of competitors.
Amalgamation
Results in the dissolution of all original entities.
When two banks amalgamate, neither of the original banks continues to exist.
Merger
The combination of two or more companies into one, with at least one surviving entity.
The merger of Bank A with Bank B resulted in Bank A expanding its customer base.
Amalgamation
Often undertaken to strengthen market position by pooling resources.
Amalgamation can provide companies with the resources to compete internationally.
Merger
Generally involves the acquisition of smaller firms by larger ones.
A large telecommunications company often merges with smaller startups to innovate more rapidly.
Amalgamation
Aims at achieving greater efficiency and innovation.
Amalgamation can lead to the introduction of new technologies and processes in the market.
Merger
Can be classified into various types such as horizontal, vertical, or conglomerate.
A horizontal merger between two pharmaceutical companies increases market share.
Amalgamation
Requires comprehensive valuation of assets and liabilities.
Before amalgamation, companies need thorough audits to agree on the terms of asset management.
Merger
Seeks strategic benefits like market expansion and cost reductions.
By merging with a competitor, a company can access new markets and reduce operational costs.
Amalgamation
The act of amalgamating or the condition resulting from this act.
Merger
The act or an instance of merging
A merger of technique and creativity.
Amalgamation
A consolidation or merger, as of several corporations.
Merger
An absorption of one corporation by another, with the corporation being absorbed losing its separate identity and governance.
Amalgamation
The production of a metal alloy of mercury.
Merger
(Law) An absorption of a lesser estate, contract, criminal offense, right, or liability into a succeeding larger one, resulting in the extinction of the former.
Amalgamation
The process of amalgamating; a mixture, merger or consolidation.
Merger
One that merges.
Amalgamation
The result of amalgamating; a mixture or alloy.
Merger
The act or process of merging two or more parts into a single unit.
Amalgamation
(specifically) The production of an alloy of mercury and another metal.
Merger
(economics) The legal union of two or more corporations into a single entity, typically assets and liabilities being assumed by the buying party.
Amalgamation
(obsolete) The intermarriage and interbreeding of different ethnicities or races.
Merger
(legal) An absorption of one or more estate(s) or contract(s) into one other, all being held by the same owner; of several counts of accusation into one judgement, etc.
Amalgamation
The act or operation of compounding mercury with another metal; - applied particularly to the process of separating gold and silver from their ores by mixing them with mercury.
Merger
(phonology) A type of sound change where two or more sounds merge into one.
Amalgamation
The mixing or blending of different elements, races, societies, etc.; also, the result of such combination or blending; a homogeneous union.
Merger
One who, or that which, merges.
Amalgamation
The combination of two or more commercial companies
Merger
An absorption of one estate, or one contract, in another, or of a minor offense in a greater.
Amalgamation
The fusion of two or more companies to form a completely new entity.
The amalgamation of two media firms created a new company with extensive reach.
Merger
The combining of two groups into a unified single group under a single leadership, with voluntary participation by the leaders or management of both groups.
Merger
The combining of two commercial enterprises into a unified single enterprise under a single management, with voluntary participation by both parties; as, the merger of Daimler-Benz and Chrysler into Daimler-Chrysler created a powerful competitor in the automobile manufacturing industry. Compare acquisition and takeover.
Merger
The combination of two or more commercial companies
Merger
An occurrence that involves the production of a union
Common Curiosities
What is the key difference between a merger and an amalgamation?
A merger involves one or more companies being absorbed by another, while an amalgamation creates a completely new company.
Can a merger and an amalgamation have the same strategic goals?
Yes, both can aim to increase market share, reduce costs, or expand product offerings, though their structures differ.
Which typically involves more companies, a merger or an amalgamation?
Both can involve multiple companies, but amalgamations typically start from a more equal footing among all companies.
Which is more complex, a merger or an amalgamation?
An amalgamation is generally more complex due to the need to establish a new entity and integrate all aspects of the merged companies.
How do legal implications differ between mergers and amalgamations?
Mergers involve absorption and asset transfer under one surviving entity's name, whereas amalgamations require forming a new entity with its own legal identity.
What is an example of a successful merger?
An example is the merger of Disney and Pixar, which combined Disney's resources with Pixar's technological prowess.
Can international companies participate in mergers and amalgamations?
Yes, international firms frequently engage in both mergers and amalgamations to leverage global market opportunities.
What happens to the shareholders of companies involved in a merger or amalgamation?
In a merger, shareholders of absorbed companies often receive shares of the acquiring company. In an amalgamation, shareholders receive shares in the new entity.
What are the risks associated with amalgamations?
Risks include complexity in valuation, potential loss of identity, and stakeholder resistance.
Why might companies choose amalgamation over a merger?
Companies might choose amalgamation to equally merge resources and identities, avoiding dominance by one entity.
How does public perception differ between mergers and amalgamations?
Mergers might be viewed as takeovers, potentially negative, whereas amalgamations might be seen as equal partnerships, potentially more positive.
What are the financial implications of mergers compared to amalgamations?
Mergers involve straightforward asset and liability assumption by the surviving company, while amalgamations need detailed asset valuation and integration.
How does industry consolidation differ between the two?
Mergers consolidate under a single brand, enhancing market power; amalgamations may create a new market player, potentially revitalizing the industry.
What are the risks associated with mergers?
Risks include cultural mismatches, integration challenges, and not achieving anticipated synergies.
What is an example of a successful amalgamation?
The creation of Stellantis, from the amalgamation of Fiat Chrysler Automobiles and PSA Group, formed the fourth-largest automaker by volume globally.
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Written by
Tayyaba RehmanTayyaba Rehman is a distinguished writer, currently serving as a primary contributor to askdifference.com. As a researcher in semantics and etymology, Tayyaba's passion for the complexity of languages and their distinctions has found a perfect home on the platform. Tayyaba delves into the intricacies of language, distinguishing between commonly confused words and phrases, thereby providing clarity for readers worldwide.
Co-written by
Urooj ArifUrooj is a skilled content writer at Ask Difference, known for her exceptional ability to simplify complex topics into engaging and informative content. With a passion for research and a flair for clear, concise writing, she consistently delivers articles that resonate with our diverse audience.
