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February 20, 2012
Mergers and acquisitions are one of the biggest aspects of corporate finance. Mergers refer to companies that are purchased for the purpose of merging with other companies to create one large entity. Acquisitions refer to established companies that are taken over by another company.
Mergers and acquisitions are of particular interest to investors because they can cause stock values to rise or fall. They are also vital to business owners because they can result in positive or negative tax consequences when a company they own is merged or acquired.
A lot of people are familiar with the term 'hostile takeover' which refers to a company being taken over against their will. This occurs when a company is being purchased by another company, but the owner doesn't want to sell or doesn't want to be part of the parent company. Hostile takeovers only occur with companies that offer public stock that is purchased and sold via stock markets.