Business Lawyers Blog
As businesses in Texas grow, many consider mergers or acquisitions to scale up their operations. While these terms are frequently used together, they represent different legal processes. Understanding the distinction between a merger and an acquisition is crucial for any business, as each has its benefits and potential pitfalls. This knowledge helps make informed decisions on appropriately utilizing them for business growth.
Mergers
A merger occurs when two (or more) companies reach a mutual agreement to create a new legal entity that combines all parties’ assets, liabilities, and business operations. The post-merger entity often uses a different name than the pre-merger companies, even if it is just a combination of their names. For example, one of the most notable mergers in Texas history was that of Exxon Corporation and Mobil Corporation, which formed ExxonMobil in 1998. At the time, it was the largest merger in U.S. history.