Mergers and Acquisitions (M&A)

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M&A is the general term for combining companies through a merger, where two companies join as one, or an acquisition, where one company buys and absorbs another. It is the umbrella category for how ownership of a company changes hands outside an IPO.

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For startups, M&A almost always means an acquisition rather than a merger of equals, and it is the most common way venture-backed founders and investors realize a return.

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What is the difference between a merger and an acquisition?

In a merger, two companies combine into a new or surviving entity as roughly equal partners. In an acquisition, one company buys and absorbs another, which is how most startup exits actually work.

Who typically leads M&A activity for a startup?

The board and CEO run the process, often with an investment banker or M&A advisor managing outreach to potential acquirers and negotiating deal terms.

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