A merger occurs when two companies of similar size combine to form a new entity, while an acquisition happens when one company takes over another, either by mutual agreement or a hostile takeover.

Companies engage in M&A to expand market share, enter new markets, eliminate competition, achieve cost efficiencies, acquire new technologies, and increase shareholder value.

• Horizontal Merger – Between companies in the same industry (e.g., Vodafone & Idea). 
• Vertical Merger – Between a company and its supplier/distributor (e.g., a car manufacturer merging with a tire company).
• Conglomerate Merger – Between companies from different industries (e.g., Amazon acquiring Whole Foods).

• Friendly Acquisition – The acquired company agrees to the purchase (e.g., Google acquiring YouTube).
• Hostile Takeover – The acquiring company forces the purchase despite resistance (e.g., Tata Steel’s takeover of Corus).

M&A can help businesses grow faster by expanding customer bases, reducing costs, gaining access to new technologies, improving financial performance, and enhancing competitive strength.

Due diligence is the process of evaluating the financial, legal, operational, and strategic aspects of a target company before finalizing an M&A deal to ensure it is a sound investment.