Distinguish between operating mergers and financial mergers.

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Distinguish between operating mergers and financial mergers.

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Distinguish between operating mergers and financial mergers.

Explanation & AnswerSolution by a verified expert

Explanation

If there is synergy to be realized, acquiring companies will generally seek to realize those synergies by integrating the business operations of the target with its own. This would result in an operating merger. But if there is little synergy between operations or if the acquiring company wants to retain the option of selling the target company later, it may keep it intact and separate. This would be a financial merger.

Verified Answer

An operating merger is one in which the acquiring company intends to integrate and consolidate operations with the target company.
 
A financial merger keeps the target company intact as an independent business unit or subsidiary and does not meld its operations with the acquiring company.

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