What defines a pure financial merger?

A pure financial merger is characterized by the fact that it primarily involves the merging of assets and cash flows without the expectation of operational synergies. This means that the entities involved in the merger are not looking for cost savings or efficiencies that would result from the combined operations, which differentiates it from other types of mergers.

In a pure financial merger, the emphasis is placed on the financial aspects and outcomes of the transaction. The parties involved are more concerned with the valuation of cash flows and the financial strength of the entities rather than integrating business operations or pursuing strategic advantages. This type of merger is often pursued for financial reasons such as improving liquidity, diversifying the investment portfolio, or achieving a better capital structure without the complexities that come with operational integration.

This understanding highlights why the focus solely on cash flows, rather than synergies or market share, is what truly defines a pure financial merger.