This paper investigates and explains why firms find it advantageous to merge, and also provides the consequences of merger activity. The author defines types of mergers and discusses them as related to merger motives and their disadvantages. Examples of different companies in different industries are provided throughout the paper to support the arguments.In order to discuss why firms find it beneficial to merge, as well as looking at the potential consequences, it must be understood what the term merger means along with the different types in existence. The term merger is loosely used to indicate any combination of two companies. However a more detailed definition would be that a merger allows the assets and liabilities of the selling company to be transferred to and absorbed by the buying corporation.
Mergers are a significant part of corporate strategy.