M&A stands for Mergers and Acquisitions, and refers to the consolidation of companies or assets for strategic purposes.
It does not necessarily have to imply that one company wholly takes over another — there are a number of different transactions that can fall under the M&A umbrella, which can include purchase of key assets or management acquisitions. In nearly all cases, however, there are two companies involved - the buyer of capital and the seller.
2015 was the biggest year on record for M&A, with companies spending some $3.8 trillion on deals. In some cases M&A deals hold real strategic value for both companies, but in others the buying company is making a move to protect market share from a competitor.
From a stock trading perspective, many traders will own a company’s shares because they see it as an attractive acquisition target. The buying company will in many cases have to pay a premium over the current share price to purchase the company, resulting in a boost to the stock.
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