Question

What is the difference between a nonprofit “merger” and a nonprofit “acquisition”?

Answer 1

NON-PROFIT MERGER & NON-PROFIT ACQUISITION

- WHAT IS NON-PROFIT MERGER

Merger is the process of making financial and operational agreemnets between different entities with an intention of unite them to form a single entity. Both businesses and non-profit organizations are using the method of merging.

Non-profit merger is the merger of two non-profit organizations by combining their assets and liabilities same as the way of business merger inorder form a single entity.

- WHAT IS NON-PROFIT AQUSITION

Aquisition refers to the transaction relates with the purchase of one entity/organization by another entity and incorporates to it's operational activities. An aqusition takesplace , when one company acquires or purchase most of the or full shares of another company. If a company purchases 50% or more than the shares of another company then it effectively gains control of that company.

Non-profit acquisition is same as the above, it's the purchase of another non-profit entity and incorporates to it's operational activities

NON-PROFIT MERGER V/S NON-PROFIT AQUISITION

NON-PROFIT MERGER	NON-PROFIT ACQUISITION
1] Two different non-profit organizatios unite them to form a single entity.	1] It is the process of purchasing of another non-proftit organization and incorporates it in to the acquirer's operational activities.
2] Both entities will have equal controlling power over the performance of newly formed form of organization or otherwise as per the terms and conditions specified in the agreement of merging.	2] Acquisition given more or full controlling power to the party who purchases another entity. Since the assets and liabilities of another entity is incorporates with the acquirer's statements , controlling power will be vested with the purchaser.
3] Combining board have dissolved and a new board will be established.	3] One of the organizations/company involved in the combination is making the decisions , then it will be acquisition.
4] Mergers have to use carry over method for accounting purpose.	4] Under this head, acquisition method have to be used for accounting.
5] Considered to be planned and friendly	5] Considered to be hostile.
6] No power difference occures.	6] Acquiring company will have the power.