The terms 'merger' and 'acquisition' are often uttered in the same breath and are often used as though they are synonymous. However, their meanings are slightly different. Whether a purchase is considered a merger or an acquisition really depends on whether the purchase is friendly or hostile 'and how it is announced. In other words, the real difference lies in how the purchase is communicated to and received by the target company's board of directors, employees, and shareholders. Like mergers, acquisitions are actions through which companies seek economies of scale, efficiencies, and enhanced market visibility. Unlike all mergers, all acquisitions involve one firm purchasing another. There is no exchange of stock or consolidation as a new company. Acquisitions are often congenial, and all parties feel satisfied with the deal. Other times, acquisitions are more hostile.
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