In a merger, which scenario describes the outcome?

In a merger, two businesses join together to form a single entity, which is the essence of what defines a merger. The objective is typically to combine the strengths of both companies to enhance their competitive advantage, increase market share, or achieve economies of scale. This collaboration is often characterized by shared resources, management, and strategic goals, leading to a unified operation rather than one company simply taking over another.

While the acquisition, where one business purchases another, may involve some elements of consolidation, it fundamentally differs from a merger, which emphasizes partnership and collaborative integration. The option referring to a firm reducing its operations is more aligned with restructuring rather than a merger. Joint ventures, on the other hand, involve collaboration on a specific project while each company remains distinct, rather than fully integrating into a single entity as in a merger. Thus, the scenario where two businesses genuinely join together best encapsulates the concept of a merger.