We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.

What is a Merger of Equals?

Malcolm Tatum
By
Updated May 16, 2024
Our promise to you
SmartCapitalMind is dedicated to creating trustworthy, high-quality content that always prioritizes transparency, integrity, and inclusivity above all else. Our ensure that our content creation and review process includes rigorous fact-checking, evidence-based, and continual updates to ensure accuracy and reliability.

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

Editorial Standards

At SmartCapitalMind, we are committed to creating content that you can trust. Our editorial process is designed to ensure that every piece of content we publish is accurate, reliable, and informative.

Our team of experienced writers and editors follows a strict set of guidelines to ensure the highest quality content. We conduct thorough research, fact-check all information, and rely on credible sources to back up our claims. Our content is reviewed by subject-matter experts to ensure accuracy and clarity.

We believe in transparency and maintain editorial independence from our advertisers. Our team does not receive direct compensation from advertisers, allowing us to create unbiased content that prioritizes your interests.

A merger of equals is a situation in which two firms of roughly the same size choose to combine into a single business entity. This is different from mergers in which one company is identified as the acquiring entity and the other as the acquired business operation. When this merger of equals takes place, both companies effectively cease to exist, all their assets are rolled into the new combined corporation, and shareholders form both businesses receive new securities in exchange for surrendering their older shares.

In some instances, a merger of equals is referred to as a pure merger. This is because one business is not being absorbed into the operation of a different company. With other types of merger and acquisition situations, one of the two businesses involves ceases to exist, since all its assets are now the property of the acquiring company. Unlike a merger of equals, the shareholders of the acquired company surrender their shares and are granted shares issued by the acquiring business, rather than shares for a completely new business enterprise.

With this type of merger, the two businesses agree to the merger and take steps to systematically achieve the goal of a combined company. This is different from a hostile takeover, in which one business gains control over another company without the consent of the acquired company. It is also somewhat different from a friendly takeover, where a business is open to being acquired by another company, with the understanding that the acquisition means that the acquired company will no longer exist in the same form.

It is not unusual for two companies that conduct a merger of equals to establish a new company name that includes at least some references to the names of the two companies that are coming together as one. For example, if A Company merges with B Company, the new business entity may go with a name like AB Corporation. This approach is often utilized when both companies enjoyed a positive reputation among consumers and in the investment community.

Rather than taking on a name that consumers and investors would not immediately associate with those stellar reputations, the newly combined company goes with a name that keeps those reputations intact. Doing so often has the effect of enhancing those previous reputations and generates a great deal of excitement in the business community. The idea behind carefully drawing on elements of the two previous names is to maintain the goodwill enjoyed by each business before the merger of equals took place. At the same time, the right name sends the clear message that the newly combined company offers all the benefits that were available before, as well as some new ones that were not possible before the completion of the merger.

SmartCapitalMind is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Malcolm Tatum
By Malcolm Tatum
Malcolm Tatum, a former teleconferencing industry professional, followed his passion for trivia, research, and writing to become a full-time freelance writer. He has contributed articles to a variety of print and online publications, including SmartCapitalMind, and his work has also been featured in poetry collections, devotional anthologies, and newspapers. When not writing, Malcolm enjoys collecting vinyl records, following minor league baseball, and cycling.
Discussion Comments
Malcolm Tatum
Malcolm Tatum
Malcolm Tatum, a former teleconferencing industry professional, followed his passion for trivia, research, and writing...
Learn more
SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.

SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.