Recent Trends in Mergers and Acquisitions

Mergers and Acquisitions The term "mergers and acquisitions" refers to that part of business policy and investment that handles the purchasing, selling and combining of different businesses that can assist and finance a budding company in a given industry grow quickly without having to generate another business entity. Companies use mergers to expand their operations, often with the aim of increasing their long-term profitability. Also known as a takeover, a merger is the buying of one company by another.

An example of a merger in progress is that of Morgan Stanley and Washington Mutual Bank, who stepped up merger talks in September 2008. At the time, Bloomberg reported that Washington Mutual had other suitors, including Citibank, JPMorgan Chase and Bank of America. Morgan Stanley considered splitting Wachovia into a "good bank" and a "bad bank" and merging with the good one.

Mergers and acquisitions are a big part of the corporate finance world. Hundreds of millions and even billions of dollars in deals are often involved. These deals can dictate the fortunes of the companies involved for years to come, and for a CEO, leading a merger or acquisition can represent a highlight in a career. All mergers and acquisitions have one common objective, regardless of their category or structure: they are all intended to generate synergy that makes the value of the combined companies greater than the sum of the two parts.