Mergers and acquisitions (M&A) is the catch-all term used to refer to the different forms for transferring or consolidating ownership of businesses and assets. Although the terms merger and acquisition are used interchangeably, they have different legal meanings. When one company (the acquirer) purchases the stock, equity interests, or assets of another company, the transaction is called an acquisition. Sometimes an acquired company continues to operate independent of the acquirer, and sometimes the acquired company ceases to operate independently and is absorbed by the acquirer. Mergers, on the other hand, are generally the combination of two companies, and result in the formation of a new company.
In Utah, mergers and acquisitions (M&A) are governed by state statutes, particularly the Utah Revised Business Corporation Act for corporations, and other relevant laws for different types of business entities. An acquisition occurs when one company takes over another and clearly establishes itself as the new owner. This can be done through the purchase of stock, equity interests, or assets. Post-acquisition, the acquired company may continue to operate independently, or it may be fully integrated into the acquiring company. A merger, in contrast, is the fusion of two companies into a new entity, with both companies often ceasing to exist in their previous forms. The resulting company combines the assets and liabilities of both original entities. Both processes require compliance with regulatory requirements, including approval by the boards of directors of the involved companies, shareholder approval in certain cases, and adherence to reporting and disclosure obligations under federal law and the rules of the Securities and Exchange Commission (SEC). It is advisable for companies to consult with an attorney to navigate the complex legal landscape of M&A transactions.