The term, mergers, is often thought to be synonymous with acquisitions, though in definition the two are unique concepts. Whereas an acquisition results in the purchasing entity taking over a company that will be absorbed by the buyer so that it no longer exists once the transaction is complete and the purchaser will continue to trade its stock under its own name; a merger is distinctive. When two firms agree to combine and proceed as a single new company, typically for the mutual benefit of both firms, the process is labeled a merger. When a merger is transacted, both companies will surrender their stock and new stock will be issued under the new entity and assets are comingled.

Divestitures happen when a corporate entity decides to sell off portions of the business that are not related to its core operations or are not performing well, enabling the company to focus on its primary product or service. The decision to divest is often based on a strategic move to obtain an influx of cash or for business valuation purposes where the two separate entities would be valued much higher individually than as a single unit. Divesting may also be used to stabilize a company when the product or service of the division being divested is subject to a high level of volatility in the marketplace.

In both mergers and divestitures, objective analysis must be done prior to the planning and initiation of the organizational transaction. Creek Systems can provide your organization with a team of expert consultants specializing in the analytical techniques necessary for evaluating the benefits and risks for both mergers and divestitures. In addition to analytics, Creek Systems enterprise consultants are proficient at developing the implementation plan and managing the transition.

Contact Creek Systems for additional information on:

Business valuation
Transition management
Vertical integration
Organizational integration

For more information about our services, complete this online form and a client relationship manager will contact you immediately.