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Thursday, April 21, 2011

Meaning And Concept Of Business Combination

Business combination is the process under which two or more business organizations or their net assets are brought under common control in a single business entity. Generally, companies doing similar type of business or involved in similar line of activities may go for business combination to get the economies of large scale production and to minimize the possibility of cut-throat competition. Business combination result the growth. Other terms applied to business combination are merger and acquisition. A 'merger' refers to a situation where two or more than two companies of similar nature combine willingly while an 'acquisition' or 'take over' refers to the situation where a bigger company takes over a smaller company. Business combination can take place either through amalgamation or through absorption.