What is MERGER DEFICIT?

A situation where the total share capital value used to purchase another company is less than the total equity value purchased. The stock bought by the company should be worth more than the share capital used to buy it. A merger deficit occurs if a company takes the funds that it raised in new stock offerings to buy the stock of another company.

More On This Topic



Link to This Definition
Did you find this definition of MERGER DEFICIT helpful? You can share it by copying the code below and adding it to your blog or web page.
Written and fact checked by The Law Dictionary