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MergerSub

MergerSub defined: A “MergerSub” 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. In this M&A structure, the Acquirer: (1) first creates a new entity such as an LLC that is a shell company (the “MergerSub”) that is a subsidiary of the acquirer; (2) the MergerSub then enters into a merger agreement with the acquired company; (3) afterward the acquired company is no longer an independent company but is owned by MergerSub, which in turn is owned by Acquirer. Thus after the transaction, the acquired company is effectively owned by the Acquirer.

Above is a definition for “MergerSub” from PrivCo’s Private Company Knowledge Bank, the definitive online and e-book guide to private companies and private company deals.

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