As a business owner, you may be considering ways to grow your business, including merging with or amalgamating another company. However, it’s important to understand the differences between these two options and consult with Ontario corporate lawyers to determine which is the best fit for your specific circumstances.
Merger
A merger is when two or more companies combine to form a new company. This means that the original companies are dissolved and cease to exist, and a new entity is created. The shareholders of the original companies become shareholders in the new company in proportion to their previous ownership stakes.
There are several types of mergers, including:
- Horizontal merger: This is when two companies that produce similar products or offer similar services merge to become one.
- Vertical merger: This is when a company merges with a supplier or customer to gain better control over the supply chain.
- Conglomerate merger: This is when two companies that have no common business interests merge to diversify their operations.
Amalgamation
An amalgamation, on the other hand, is when two or more companies combine to form a single entity, but unlike a merger, the original companies continue to exist as part of the new entity. The shareholders of the original companies become shareholders in the new entity in proportion to their previous ownership stakes.
There are two types of amalgamations:
- Horizontal amalgamation: This is when two or more companies in the same industry combine to form a new company.
- Vertical amalgamation: This is when a company merges with a supplier or customer to create a new company that controls the supply chain.
Key Differences
The main difference between a merger and an amalgamation is that in a merger, the original companies are dissolved and cease to exist, while in an amalgamation, the original companies continue to exist as part of the new entity.
Additionally, in a merger, the shareholders of the original companies become shareholders in the new company in proportion to their previous ownership stakes, while in an amalgamation, the shareholders of the original companies become shareholders in the new entity in proportion to their previous ownership stakes.
Consulting with Ontario Corporate Lawyers
Determining which option is best for your business requires careful consideration of various factors, including tax implications, legal requirements, and the goals of the business. It is essential to seek the advice of experienced Ontario corporate lawyers who can guide you through the process and help you make informed decisions.
At Falcon Law PC, our Ontario corporate lawyers have extensive experience advising businesses on mergers and amalgamations, as well as other areas of corporate law. Contact us at info@falconlawyers.ca or 1-877-892-7778 to schedule a consultation and learn more about how we can assist you.
