I see many different terms used to describe corporate transactions. What is the difference between a merger, an acquisition, and a divestiture?
It’s important to know the difference, as this can trigger changes in your outstanding stock grants. An acquisition of a company occurs when all or part of a company is purchased by another company. Sometimes an acquisition takes the form of a sale of a company’s assets. At other times, the shareholders of a target company sell their shares to a buyer. The assets or shares of a target company may be purchased directly by another company. In other instances, the buyer creates a subsidiary for the purpose of acquiring the shares or assets of the target. A merger is a form of an acquisition that is structured by combining the target company with the acquirer (or its acquisition subsidiary) into one legal entity. Sometimes the target merges with the acquirer or its subsidiary, and the target is the surviving legal entity. In other cases, the acquirer or its acquisition subsidiary is the surviving legal entity in a merger. A divestiture is the name given to a broad range of transactions tha
