Mergers and acquisitions are other means by which you can expand and grow your business.  These are techniques used frequently by large businesses.  This option may not be a good option for most small businesses because it is capital intensive and fraught with legal perils. 

A merger is a legal consolidation of two companies into one entity.

An acquisition is when one company takes over another company and completely establishes itself as the new owner.  The acquired company still continues to exist as an independent legal entity. 

Mergers and acquisitions are techniques to eliminate competitors by bringing them under your control.  By doing so you get to acquire the market share that those organizations have and the skill sets that they posess.

Merger and acquisition techniques includes:

Buyout:  The buyout  method is where the purchasing company uses it’s own assets to acquire the targeted company.  This may be a situation where the purchasing company pays cash to acquire the targeted company based on its sale price or buys a majority of shares (stocks) of the targed company.  This often involve taking on the debt of the targeted company.

Leverage Buyout:  This is when the target company (company being bought) is purchased  with the combination of equity and significant  amounts of borrowed money where the targeted company’s assets are used as collateral for most of the loan.  In this type of arrangement the purchasing company does not have to put much of it’s capital or assets at risk.