FORMS OF BUSINESS COMBINATIONS MERGERS A merger is a combination of two or more businesses in which only one of the corporations survives. The other corporation ceases to exist and its assets and debt are taken over by the surviving corporation. Thus in a merger of Companies X and Y , company X may continue while Y ceases to exist. The merger may occur in four ways: Purchase of assets Purchase of Common Stock Exchange of Stock for Assets Exchange of Stock for Stock Consolidations A consolidation is a combination of two or more businesses into a third entirely new corporation. The legal and financial characteristics of a consolidation are basically the same as those for a merger. KINDS OF MERGERS Horizontal Merger : This is the joining of two firms in the same areas of business. Examples would be the combining of two book publishers or two manufacturers of toys. Vertical Merger : This is the joining of two firms involved in different stages of the prod...