Merger refers to the combination of two or more companies into a single entity, typically aimed at achieving business growth, operational efficiency, and increased market share. In a merger, one company may absorb another, or both may consolidate to form a completely new organization. This strategic move helps businesses pool resources, streamline operations, and enhance competitiveness in the market.

From a financial perspective, mergers are often pursued to gain synergiesówhere the combined value and performance of two firms exceed the sum of their individual parts. Companies merge for various reasons, such as expanding into new markets, reducing costs through economies of scale, or acquiring advanced technologies and talent. Common types of mergers include horizontal mergers (between companies in the same industry), vertical mergers (along the supply chain), and conglomerate mergers (between unrelated businesses).

Before a merger is finalized, the companies involved undergo a detailed process of due diligence to assess financial health, liabilities, and potential risks. This ensures transparency and fair valuation for shareholders. In India, mergers are regulated under the Companies Act, 2013 and require approval from authorities such as the National Company Law Tribunal (NCLT) and the Securities and Exchange Board of India (SEBI) to protect investor interests and maintain market integrity.

While mergers can lead to increased shareholder value and operational efficiency, they also carry risks, including cultural mismatches, integration challenges, and potential regulatory hurdles. Therefore, investors should closely evaluate a companyís merger plans, financial disclosures, and strategic rationale before making investment decisions. Understanding mergers is crucial for anyone seeking to interpret corporate actions and their long-term impact on stock performance.