Topic: Merger,consolidation, & amalgamation

A fellow with more than a passing interest in how things work contacted us to ask about when something is merged and when it is more properly understood as consolidated.

In law, a merger names “the absorption of an estate, a contract, or an interest in another; the absorption of a minor offense in a greater one; or the absorption of a cause of action into a judgment." That absorption sense carries on into business, where merger can refer to a particular sort of combining two or more organizations, such as business concerns. Although a merger may take place between two equal entities, that term has a specific sense naming “the absorption by one corporation of one or more other corporations."

In contrast, although consolidation can be used synonymously with merger, its business sense is just as specific: “the unification of two or more corporations by dissolution of existing ones and creation of a single new corporation."

So the differences are clear: merger has to do with absorption, while consolidation concerns creating a new entity. How does amalgamation fit into this? Appropriately enough, since amalgam names “a mixture of different elements," amalgamation can name either a merger, a consolidation, or any of various methods of combining two or more business concerns.

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