An acquisition is when one company buys a part of another, whether it’s specific assets or an entirely different segment of the target firm. On the other hand, a merger involves the complete assimilation of the target firm by the acquiring company, resulting in the cessation of the target firm’s existence, leaving only the new, combined entity.
Within a merger or acquisition deal, valuation is essentially the price one party is willing to pay to the other, or the value one party is willing to relinquish to make the transaction successful. Valuations can be determined through appraisals or by considering the stock price of the firm, particularly if it’s a publicly traded company. However, in practice, the final valuation often emerges as the outcome of negotiations between the parties involved.