Amalgamation vs Merger – Difference and Comparison

What is Amalgamation?

In business, amalgamation refers to the process of combining two or more companies or organizations into a single entity. This can be done through a merger, acquisition, or consolidation. The result of an amalgamation is a new entity created by combining the assets and liabilities of the merged entities. Amalgamation can be done for a variety of reasons.

One of the main reasons companies choose to amalgamate is to increase their market share and gain a competitive advantage. By merging with or acquiring another company, a business can expand its product or service offerings, access new markets, and increase its customer base. This can help the company to better compete with larger, more established companies in the industry.

Amalgamation can also lead to cost savings for the combined entity. By merging with or acquiring another company, a business can achieve economies of scale, reducing production, marketing, and distribution costs. This can help the company to operate more efficiently and increase its profitability. if the companies being merged are complementary, the merger can lead to revenue synergies.

What is Merger?                                                                             

In the business context, a merger refers to the combination of two or more companies, organizations, or entities into one. The merger process involves integrating the operations, management, and ownership of the merged entities. Mergers can take place between companies of the same size or companies of different sizes, and they can happen between companies in the same industry or companies in different industries.

Mergers are driven by strategic considerations, such as increasing market share, acquiring new technology, accessing new markets, or achieving economies of scale. The rationale behind a merger is that the combined entity will be able to achieve greater efficiencies and competitive advantages than the individual companies could achieve alone. However, it is important to note that not all mergers are successful.

Academics have studied the motivations behind mergers and the results of the merger on the companies involved. Studies have shown that mergers can lead to positive and negative outcomes for the companies involved. Positive outcomes can include increased market share, improved operational efficiency, and revenue. Negative outcomes can include decreased profitability, cultural clashes, and increased debt.

Difference Between Amalgamation and Merger

  • Amalgamations refer to the process of uniting two or more entities into a single, united one, whereas mergers refer to the joining of two or more businesses, organizations, or other entities into one.
  • The result of amalgamation is a new entity that is created by combining the assets and liabilities of the entities that were merged, whereas a merger refers to the integration of the operations, management, and ownership of the merged entities.
  • Amalgamation can be done through a merger, acquisition, or consolidation, whereas a merger can happen through the stock exchange, cash purchase, or asset purchase.
  • Amalgamation can lead to cost savings for the combined entity, whereas a merger is driven by strategic considerations.
  • Amalgamation can be done for a variety of reasons, including to increase efficiency, reduce costs, or create a more competitive entity, whereas mergers are analyzed to identify potential positive and negative outcomes for the companies involved.

Comparison Between Amalgamation and Merger

Parameters of ComparisonAmalgamationMerger
DefinitionCombining Two Entities into a Single OneCombination of Two or More Companies
ResultCombination of Assets and LiabilitiesIntegration of Operations, Management, and Ownership
Method(s)Merger, Acquisition, ConsolidationStock Exchange, Cash Purchase, Asset Purchase
BenefitsCost SavingsStrategic Benefits
CausesLow Efficiency, Higher Costs, Competetive EntityTo Identify and Multiply Benefits at Low Costs

References

  1. https://core.ac.uk/download/pdf/9315408.pdf
  2. https://etd.uwc.ac.za/handle/11394/6341