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What is the difference between a merger and consolidation?

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What is the difference between a merger and consolidation? List and explain the motives of mergers and consolidations.

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This solution discusses mergers and consolidations in 539 words. The expert explains the motives of mergers and consolidations.

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In a merger, one company takes over another, including all assets and liabilities. The company that takes over remains active, while the one that is acquired essentially no longer operates. In a consolidation, two or more companies merge to form one new, larger company. All of each company's assets and liabilities then belong to the new company. When mergers take place, one company remains the same. For example, when Bank of America bought Merrill Lynch, the former stayed the same while Bank of America became Bank of America Merrill Lynch. Consolidation requires that an entirely new company be formed. For example the consolidation of Conoco and Phillips that resulted in the new ConocoPhillips, was a consolidation merger.

A merger takes place when two companies combine to form one company. A merger is very similar to a takeover, except that in the case of a ...

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