Mergers and Joint Ventures

There are many differences between a merger and a joint venture. A merger or a more fitting way to describe it is a merger of equals because it happens when two companies that are nearly the same in size make the decision to bring their operations and company structure together for the good of both parties involved. Merger however, comes with benefits such as combined effect between the two companies. This applies to any type of cost reduction or improvements in process flows that are resulting in the companies coming together also economies of scale that include the need for fewer employees that results to lower

Staff cost are just two of the main results of the presence of synergy. A joint venture is the combining of two business entities to take on a single project or aspect of business. This intern does not dissolve the original business nor does it change the organizational structure to the point that it occurs under a merger. Each company will take an interest in both the operational and financial aspect of the new company and their share of the profits or losses of the new venture, in which is linked directly to the level of involvement or commitment they put in from the start. Granted joint ventures are not a complete and in some instances are not as permanent as mergers because the new company that was formed from the joint venture may be dissolved once the project is over. To sum it up, the difference in a merger and a joint venture is they both are involved in bring two entities together and that is when the similarities end. (nataliajones & Scheid, 2010).

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