Merger can be define by a very simple statement that it is a combination of two things, especially when two companies involve in each other and form a new company and in acquisitions one company takeover the one company. Companies use merger and acquisitions as a tool for spreading their business and for long term profitability. Most of time mergers and acquisitions take place with a mutual agreement. In mergers two companies come together to frame a completely new business entity or one company give permission to another to occupied its business. In this case one company completely loses its identity. Many countries follow and enforce law regarding mergers in trade units. In India mergers and acquisitions governed by the Indian Companies Act, 1956, under sections 391 and 394. For mergers and acquisitions the consent of the High Court is required and 3/4^th part of the shareholders and creditors should present in the General Board Meetings of the concerned firms. Broadly mergers can be of four types. Very common and simple merger is horizontal merger, where similar business entity merges together. Another type of merger is vertical merger where companies merge together which has different level of production in the same product. Third type of merger is congeneric merger where two companies are in the same general industry but they don’t have any common clients. Last but not the least is conglomerate merger where both the companies are in unrelated business with each other.The biggest mergers and acquisitions in India are Idea and Vodafone. It is India’s largest telecom mergers and word’s 2^nd largest. Tata steel the biggest steel company in India and Corus the leading name in Europe Steel. Mergers and acquisitions have both the sides positive and negative. Companies increases their profit, they can invest more in research and development activities. On the other hand merger and acquisition increase the market share of company it leads the monopoly condition which finally increases the product’s market retail price. Mergers and acquisitions increase the size of company and its production but some where it dilutes the coordination and communication within the company. Although mergers and acquisitions have its negative sides but still companies go for mergers and acquisitions because these reduces the competitions, enhance the power of supply chain, these provides growth to the business and many more.

KEYWORDS: Long Term Profitability, Mutual Agreement, Shareholders, Creditors, Conglomerate.