merger or acquisition
Definition
A merger happens when two separate companies combine to form one new company, while an acquisition is when one company buys another company outright and absorbs it. Both situations result in one of the original businesses ceasing to exist as its own independent entity. These deals can range from friendly partnerships to one company simply buying out another whether they want to be bought or not.
Example
If your small bakery chain merges with a larger food company, your bakery stops existing as its own legal entity and all your contracts, employees, and debts become part of the new combined company.
Watch Out
If your business has contracts with another company and that company gets acquired, you may suddenly find yourself legally bound to a completely different company you never agreed to work with.
See which terms appear in your contract?
This definition is for informational purposes only and does not constitute legal advice. Please consult with a licensed attorney for legal guidance.