A merger is the combining of two or more companies
An acquisition normally involves a larger company (a predator) acquiring a smaller company (a target).
A demerger involves splitting a company into two separate companies which would then operate independently of each other.
Suppose a company decides to expand.
Step 1:
Its directors will produce criteria (size, location, finances, products, expertise, management) against which targets can be judged.
Directors and/or advisors then seek out prospective targets in the business sectors it is interested in.
The team then examines each prospect closely from both a commercial and financial viewpoint against criteria.