What is the difference between Mergers and Joint Ventures?

A merger occurs when two companies “merge” and become one organization or a new single entity. Mergers are not very common because it would not be logical for two companies to combine their staff and resources, and an example would be what do you do with two CEOs?

A merger can be profitable in that the market value increases, and it becomes more profitable. A joint venture is a commercial organization started jointly by two or more parties, and their distinct identities are kept the same.

These parties can be individuals or companies form a partnership to share in a venture to share markets, property, assets, and profits, and there is no transfer of ownership in the transaction.

Starting a business is an amazing accomplishment, and there are times where businesses may join together. There are many terms that can be used to describe these businesses joining. One is a merger. When a merger happens, it is two businesses that are the same size that come together as one.

There are different types of mergers, including horizontal, vertical, and market extension. Another type is a joint venture. In this type, two companies are still coming together, but they still exist asindividual companies. Between the two, a joint venture does not require as much commitment, and they are mainly for short term purposes.