Classroom Companion: Business

Organic growth over one year
. Fig. 14.1 Facebook organic growth from 2009 to 2010. (Authors’ own figure)
 
Chapter 14 · Mergers and Acquisitions

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Definition 14.1 Organic Growth
Organic growth is growth generated by the company’s own assets and not from 
growth that comes from acquiring other companies. The organic growth may be 
positive or negative.
However, there is another way for companies to grow, namely, through mergers and 
acquisitions (M&A).
Definition 14.2 Mergers and Acquisitions
A merger is a legal consolidation of two enterprises into one where both enterprises 
cooperate equally in the merger, whereas an acquisition implies that one company 
(the acquirer) takes control of another company (the target company) by ownership 
of stocks, assets, or equities of that company. Acquisition is also referred to as take-
over (Bannock et al., 
1998
).
In commercial terms, merger and acquisition are often treated as synonymous 
because both result in a consolidation of two companies. This is exemplified in 
.
Fig. 
14.2
 for the 2014 Facebook acquisition of WhatsApp (Deutsch, 
2020
). The 
result is a company with joint assets, employees, and customer base from the 
merged or acquired companies. Facebook acquired WhatsApp—a competing 
social media with about 500 million MAU—for $19 Billion. It is one of the largest 
acquisitions ever performed and has changed the business landscape in the social 
media market toward increased concentration (less competition).
WhatsApp
Facebook
Facebook acquisition
of WhatsApp
«New» Facebook
. Fig. 14.2 The 2014 Facebook acquisition of WhatsApp. (Authors’ own figure)