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Simple English definitions for legal terms
upstream merger
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A quick definition of upstream merger:
An upstream merger is when a company that owns another company merges them together. It's like when you have two toys and you decide to put them together to make one big toy. In an upstream merger, the bigger company (the parent) absorbs the smaller company (the subsidiary). This means that the smaller company becomes a part of the bigger company and no longer exists on its own.A more thorough explanation:
An upstream merger is a type of merger where a subsidiary corporation is merged into its parent corporation. This means that the subsidiary no longer exists as a separate entity and all of its assets and liabilities become part of the parent corporation.
For example, if Company A owns 100% of the shares of Company B, they may decide to merge Company B into Company A. This would result in Company B no longer existing and all of its assets and liabilities becoming part of Company A.
Another example of an upstream merger is when a holding company merges with its subsidiary. This is a common strategy used by companies to simplify their corporate structure and reduce administrative costs.