Mergers & Acquisitions Advisory

A Neumann & Associates, LLC

July 2, 2019

Understanding The Basics of Mergers and Acquisitions

By Achim Neumann

Both mergers and acquisitions are a big and important part of the business world. Without them, large portions of the financial world wouldn’t exist, and Wall Street wouldn’t be as successful. These transactions are often newsworthy stories, and can be a huge benefit to the CEO overlooking the deal. 

Basics of M&A

M&A is a term that covers the deal when businesses consolidate their companies and assets through financial deals. M&A is much more than merely mergers and acquisitions, as it can also include consolidations, tender offers, management acquisitions, and purchasing assets. 

Mergers and acquisitions are synonyms and often used interchangeably, even though the mean different things. Mergers are deals when two companies of similar size and scope agree to merge and become a single entity. These companies are more or less equals, even though there are always details underneath that don’t exactly go as smoothly as possible. Acquisitions is when a larger company absorbs a smaller one, and the smaller company ceases to exist legally. All of the target company’s assets will belong to the buyer, and only the buyer’s stocks will continue to be traded.

Merger Variations

There is no one-size-fits-all type of merger that can cover every business out there. That’s why there are several types of mergers. They’re usually classified by the relationship between the merging companies.

  • Vertical Merger – this type of merger happens with types of businesses like production and supply. A prime example would be an ice cream maker with a cone supply company merging.
  • Horizontal Merger – when two companies that are direct competition in the same field and have similar products merge.
  • Conglomeration – this is a merger when two companies have no common business fields.
  • Congeneric Merger – a type of merger that happens when two companies operate in the same field, but in different ways. For example, a cable company and TV manufacturing.
  • Market-extension Merger – when two companies sell similar products but in a different market.
  • Product-extension Merger – when two companies operate in the same market, but different, yet related products.

Acquisition Details

A company can purchase another with cash, stocks, or both. Another example of acquisition is when the larger company only purchases the smaller one’s assets. Then the smaller company becomes a shell, and it will either liquidate or enter a different area of business. 

A reverse merger is when a private company wants to become publicly traded in a short amount of time. When that private company is eager for financing, it buys out a shell company with little to no business and assets, and then merges with it to become an entirely new publicly traded corporation. 

Breaking up

Larger businesses often desire to become smaller, even though that might appear counterintuitive on first glance. It’s another type of corporate restructuring, such as mergers and acquisitions, only this transaction is ended with the financial freedom of a business unit that was previously under the larger company. This is usually done so as the smaller company can focus on its core principles and operations, even if that move can be financially risky.

About A Neumann & Associates, LLC

A Neumann & Associates, LLC is a professional mergers & acquisitions and business brokerage firm having assisted business owners and buyers in the business valuation and business transfer process through its affiliations for the past 30 years. With an A+ Better Business Bureau rating, the company has senior trusted professionals with a deep knowledge based in multiple field offices along the East Coast and has performed hundreds of business valuations in its history. The firm’s competitive transaction fees are based on successfully completing transactions. For more information, please contact A Neumann & Associates at 732-872-6777 or

Comments are closed.

Any questions? Please contact us at 732-872-6777
Call Now

Client Testimonials

“Your vetting is simply outstanding, among the best I've seen from a broker.”

Eric H., Investor

“I recently contacted A. Neumann and Associates about getting a valuation of my business done. I spoke with Marc, who explained the process in detail. After meeting with Marc in order to get a clear understanding of my business, and what I was hoping to accomplish. His patience in answering all my questions and his knowledge of the proper way to market my business gave me great confidence that this is the firm I will be using to sell my business for max value. Working with Marc at A Neumann & Associates was very easy and professional. I did not know all that was going to be involved in selling my business but they helped me through the process. What I thought was going to be a just another one of those pushy sales companies was just the opposite. Polite, knowledgeable, and a pleasure to talk to and deal with. I highly recommend this firm to anybody who wants to sell now or down the road. Marc not only knows his stuff, but actually is a real nice guy.”

Double Diamond

“Used A Neumann & Associates to sale my business. could not imagine having done it with out the patience and experience Gary provided. Thanks Gary,”

Dennis Frazier

“Working with Marc and his company was a pleasure. What I thought was going to be a just another one of those pushy sales companies was just the opposite. Polite, knowledgeable, and a pleasure to talk to and deal with. Marc handled most of the interaction and he has one of the greatest demeanors. Again, it was a pleasure working with him and his firm.”

Douglas DiCeglio

“I recently completed an acquisition using A Neumann & Associates. Tony Valentino was very helpful and accessible during the entire process. They do a thorough job vetting both parties and got us to the finish line.”

Srini Mudambi

“Claus out of Florida helped us with the sale of our business. We had never done anything like this and him and his team walked us through the process from start to finish. We had some challenges through the process and Claus continued to show up even in the difficult conversations.”

Colby Harris, Co-Owner, Del Mar Designs

“Claus Madsen thoroughly helped us with selling our company. From the 1st introductory meeting explaining to us what was possible, to providing us with resources to assist with the sale. Claus was invaluable throughout the whole sales process. Claus was with us every step of the journey and always made himself available for any questions or issues that came up along the way. If you are interested in selling your business, I encourage you to reach out to Claus and the ANA team so that they can let you know what’s achievable. These guys will make it happen!”

Ron Harris, Co-Owner and Vice President, Del Mar Designs

“A Neumann & Associates is the only business broker I would use or consult with. They have assisted with 3 business sales over the past 15 years with me. They are honest and sincere and have always performed better than my expectations. They are the only one i would use for the sales of my businesses.”

James Belanger, Business Owner

“I wanted to take a second to commend the exemplary customer service from both you [Karin Neumann] and Mr. Valentino. It’s both a rarity in the industry, and very much appreciated.”

Andrew G., Investor

“We worked with Neumann & Associates to investigate the purchase of a research company in 2010 and found Achim to be capable, forthright and realistic. His depth of experience enabled us to fully understand our options, offering creative options that might enable the acquisition. While we didn’t acquire that particular company at that time, we know exactly who to call whenever we’re looking to buy or sell a business.”

Daniel Coates, Buyer
view all testimonials

Contact A Neumann & Associates, LLC

If you are considering selling your business, please contact us to learn more about our comprehensive service spectrum. Our experienced professionals will answer all your questions about selling a privately held business in complete confidentiality. Please fill out our contact form, or call us at 732-872-6777. We will contact you directly and will never identify ourselves to your employees.

call us now
Contact Us for a Free, Confidential Consultation

Experienced M&A Advisors available

Full Name
Email Address
Phone Number