Amalgamation

Amalgamation

Amalgamation is a type of merger process in which two or more companies combine together to form a new entity. It is a combination of two or more independent business organizations carrying on the business of a like nature into a joint one and thus forming a new company. It results in the formation of an entirely new company. It is a type of consolidation process under a merger. It is the process of combining or uniting multiple entities into one form. A minimum of three companies is required for the amalgamation process. They are often done when competing companies engaged in a similar business would achieve some synergy or cost savings by combining their operations, which can be quantified in a financial model. Shares of the new entity formed in the process are given to the shareholders of the existing entities in the amalgamation process. All the shareholders in the existing entities become shareholders in the new entity.

In, corporate finance, amalgamation is the combination of two or more companies into a larger single company. In business, an amalgamation is defined as the merger of two or more companies. It typically requires investment bankers, lawyers, accountants, and the executives at each of the combining companies. Asset and liabilities of the existing entities in the amalgamation process are transferred to an entirely new entity. Here is a list of reasons why companies perform consolidations:

  • Access to new markets,
  • Access to new technologies,
  • Access to new clients/geographies,
  • Cheaper financing for a bigger company,
  • Eliminating competition.