Mergers and acquisitions (M&A)

This term, often abbreviated to M&A, concerns corporate takeovers. Genuine mergers, in which two companies of roughly equal size combine, are much rarer than acquisitions, in which a larger company buys a smaller one. And hostile acquisitions, in which the smaller company resists the deal, are rarer than agreed takeovers. The deals are very lucrative for investment banks, and other advisers, who are thus understandably happy to recommend them. But the buying company faces the risk of overpaying for the target and the danger that the culture of the two businesses is incompatible, leading to disappointing returns.