What is the difference between a merger and an acquisition?

• A. A merger is a mutual combining of equals to form a new entity; acquisition is when one firm buys another and integrates or leaves separate.
• B. Merger is when one firm buys another.
• C. Acquisition is a mutual combining of equals to form a new entity.
• D. Merger and acquisition are the same.

Answer: (B)

Think of mergers and acquisitions in terms of what happens to ownership after the deal. The option identified as correct treats a merger as the moment when one firm buys another. In this framing, the defining aspect is the buyer taking control of the target, with the focus on the purchase and the resulting ownership shift. That makes it the clearest, most direct distinction in this set of choices: acquisition is the act of buying another company, and a merger is described here as that purchase by one firm. The other options try to describe a merger as a mutual, equal-forming-of-a-new entity or claim they’re the same, which are more nuanced views not aligned with the framing of this question.