What is a Surviving Company?

A surviving company is the entity that gains control of all net assets and operations after a business combination has been completed. The surviving company could be one of the entities originally entering into the business combination, or it could be an entirely new entity. The designation of the surviving entity is frequently based on the tax structure of the combination, to minimize the tax burden on the combined entity or its shareholders. The designation may also be based on the relative size of the two entities, where the larger one is usually the surviving entity.

Example of a Surviving Company

A notable example of a surviving company following a business combination is Disney’s acquisition of Pixar Animation Studios in 2006. In the transaction, The Walt Disney Company acquired Pixar in an all-stock deal valued at $7.4 billion. After the merger, Disney was the surviving entity, while Pixar retained its identity as a brand under Disney's larger corporate structure.

This combination exemplifies how a larger corporation (Disney) can strategically merge with another company (Pixar) while allowing the smaller entity to retain its innovative identity and expertise. Disney emerged as the surviving company, enhancing its product offerings and overall value.