Business, Legal & Accounting Glossary

Definition: Merger

Quick Summary of Merger

Two organisations agree to work together in a situation where neither can be regarded as having acquired the other.

What is the dictionary definition of Merger?

Dictionary Definition

  1. The act or process of merging two or more parts into a single unit.
  2. economics The legal union of two or more corporations into a single entity, typically assets and liabilities being assumed by the buying party.
  3. legal An absorption of one or more estate(s) or contract(s) into one other, all being held by the same owner; of several counts of accusation into one judgement, etc.


  1. in corporate law, the joining together of two corporations in which one corporation transfers all of its assets to the other, which continues to exist. In effect, one corporation “swallows” the other, but the shareholders of the swallowed company receive shares of the surviving corporation. A merger is distinguished from a “consolidation,” in which both companies join together to create a new corporation.
  2. in real property law, when an owner of an interest in property acquires a greater or lesser interest in the same property, the two interests become one. Examples: a person with a life estate is given the title to the property by inheritance, the life estate is merged with the titled interest.
  3. another important form of merger occurs when a person acquires two parcels of land which were once a single lot that had been divided into two lots by a “lot split” granted by the city or county. If the minimum lot size has been increased by changes in local ordinances and the two lots are now sub-standard size, the buyer who acquires title in the two lots may find that they are “merged” into one lot and he or she has lost the right to build a house on each lot. To avoid this problem, the buyer should make sure title in each lot is obtained under a different name, i.e. husband taking one, and wife the other.

Full Definition of Merger

Mergers and acquisitions are transactions in which the ownership of companies, corporations, organisations, or their operating units are transferred or consolidated with other entities.

A merger is an agreement that unites two existing companies into one new company.

In business or economics, a merger is a combination of two companies into one larger company. Such actions are commonly voluntary and involve a stock swap or cash payment to the target.

A stock swap is often used as it allows the shareholders of the two companies to share the risk involved in the deal. A merger can resemble a takeover but result in a new company name (often combining the names of the original companies) and in new branding; in some cases, terming the combination a “merger” rather than an acquisition is done purely for political or marketing reasons.

Classifications Of Mergers

Horizontal mergers take place where the two merging companies produce a similar product in the same industry.
Vertical mergers occur when two firms, each working at different stages in the production of the same good, combine.
Conglomerate mergers take place when the two firms operate in different industries.
A unique type of merger called a reverse merger is used as a way of going public without the expense and time required by an IPO.


The occurrence of a merger often raises concerns in anti-trust circles. Devices such as the Herfindahl index can analyze the impact of a merger on a market and what, if any, action could prevent it. Regulatory bodies such as the European Commission and the United States Department of Justice may investigate anti-trust cases for monopolies dangers, and have the power to block mergers.
The completion of a merger does not ensure the success of the resulting organization; indeed, many (in some industries, the majority) mergers result in a net loss of value due to problems. Correcting problems caused by incompatibility – whether of technology, equipment, or corporate culture – diverts resources away from new investment, and these problems may be exacerbated by inadequate research or by concealment of losses or liabilities at one of the partners. Overlapping subsidiaries or redundant staff may be allowed to continue, creating inefficiency, and conversely, the new management may cut too many operations or personnel, losing expertise and disrupting employee culture. These problems are similar to those encountered in takeovers. For the merger to not be considered a failure, it must increase shareholder value faster than if the companies were separate, or prevent the deterioration of shareholder value more then if the companies were separate.

Examples of Merger in a sentence

The merger has been on the cards for quite some time now.
There are persistent rumours of an impending merger.
The company was pressurised into agreeing to a merger.
The shareholders believe that the executive board may be overstating the necessity for a merger.
Over two hundred jobs are expected to be lost following the merger.
The chairman has clearly stated that the deal should not be seen as a precursor to a merger.
Acceptance of the offer could be construed as taking the first step to a merger.
The board of directors have come out strongly in favour of a merger.
The merger proved to be highly lucrative for all the stakeholders involved.
Shareholders will be voting for or against the merger of the companies.
The merger puts the company in a position where it can potentially double its earnings.
Next month, shareholders will be voting on the proposed merger of the companies.
The press has leaked information about the upcoming merger.
There has been a fair amount of conjecture about an upcoming merger.
The disastrous merger demonstrated how incompatible the two companies really were.
Stakeholders are highly concerned that a merger will lead to higher costs, and as such, they are deeply opposed to the idea.
The announcement of the merger is expected to shore up share prices within the next few days.
The airline is currently involved in merger talks with an undisclosed competitor.
As of this moment of time, the proposed merger is far from a done deal.
The proposed merger will further strengthen the company and help ensure its continued success.
There has been a lot of speculation about a possible merger with another leading bank.
Following the merger, the CFO retired with a generous pension.
The merger may lead to the eventual closure of all the company’s Australian offices.
Share prices dropped significantly following news of the merger.
A spokesman for the company confirmed that a merger is indeed highly likely.
The two companies are considering the possibility of a merger.
The proposed merger has been blocked by the government due to concerns about the creation of sector-wide monopoly.
The word on the street is that the two companies are planning a merger.
There are concerns about what happens to the factory workers as a result of the merger.
The international oversight committees make sure that mergers do not lead to monopolies.
The anticipated merger of Google and Twitter will revolutionize on-line networking.

Synonyms For Merger

fusion, merging, amalgamation, consolidation, combination

Cite Term

To help you cite our definitions in your bibliography, here is the proper citation layout for the three major formatting styles, with all of the relevant information filled in.

Page URL
Modern Language Association (MLA):
Merger. Payroll & Accounting Heaven Ltd. October 25, 2021
Chicago Manual of Style (CMS):
Merger. Payroll & Accounting Heaven Ltd. (accessed: October 25, 2021).
American Psychological Association (APA):
Merger. Retrieved October 25, 2021, from website:

Definition Sources

Definitions for Merger are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 28th April, 2020 | 1 Views.