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Merger Sub

A "Merger Sub" is the term given in M&A documents of a new shell company formed by the Acquirer solely to complete its acquisition of a target company. Usually, the Acquirer: (1) creates a new entity such as an LLC (the "Merger Sub") that is a subsidiary of the acquirer; (2) the Merger Sub then enters into a merger agreement with the acquired company; (3) the acquired company is no longer an independent company but is owned by Merger Sub, which in turn is owned by Acquirer. Thus after the transaction, the acquired company is effectively owned by the Acquirer.

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Merger AgreementMergers & Acquisitions
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