BizJourney
Home › Glossary › Finance › Valuation & Deals › Merger

What is Merger?

Merger: Two companies join to form a single new one.

Where Merger fits

Merger is part of Valuation & Deals in Finance. Valuation estimates what a business is worth. Mergers and acquisitions are checked by due diligence, and present value converts future cash into today's money.

Practical tip

Never pay more than discounted future cash, and verify claims before signing.

Related terms

Due diligence
Careful checking of a deal before committing.
Acquisition
One company buys control of another.
Goodwill
Extra value paid in an acquisition above the worth of identifiable assets.

Formulas you will use with it

Debt-to-equityWACCOne-year NPVPresent value

Test yourself

Which term means: “Two companies join to form a single new one.”?

Acquisition · Goodwill · Merger

Answer: Merger

Learn Merger by playing

Quizzes, a CEO simulator, a real estate tycoon game and startup tools. Free to start, in 7 languages.

Play BizJourney free →