Question

Compare and contrast consolidations, mergers, and conglomerates.

Answer 1

Consolidation, Mergers, and Conglomerates are similar in that they concern the relationships between multiple companies.

In consolidation two or more smaller companies forms a larger company. The smaller companies cease to exist.

In mergers, one company purchases smaller companies. The smaller companies cease to exist but the purchaser continues to exist.

Thus, the difference between these two is that after consolidation there is a new company but after mergers continue an old company continues to exist.

However, a conglomerate is a large parent company which owns many subsidiaries companies with diverse or different business from the parent company. Thus, conglomerate describes many different companies and not just one company as in the case of consolidation or mergers.