Question

Distinguish between Amalgamation,Absorption and External reconstruction with suitable examples

Answer 1

Amalgamation is when two companies become a single company. They carry their business as a single unit.
An example of amalgamation is Herohonda company. It was formed by the companies Hero and Honda.
Absorption is when one company is taken over by another company.
An example of absorption is SBI had taken over many other banks.
External reconstruction happens when a company changes its external structure.
An example of external reconstruction is GoldStar changed into LG

Answer 2

$\bold{Absorption-}$

It happens when one company is taken over by another company. Ê.G.- SBI had taken absorption over many banks.

$\bold{External\:Reconstruction-}$

In external reconstruction, one company is liquidated and another new company is formed. The liquidated company is called "Vendor Company" and the new company is called "Purchasing Company". Shareholders of vendor company become the shareholders of purchasing company. the financial structure of a company.

$\bold{Amalgamation-}$

The collaboration or combing or two or more companies is called Amalgamation. E.G.- Combing of companies like Kmart and Sears.