MERGER DEFICIT
\mˈɜːd͡ʒə dˈɛfɪsˌɪt], \mˈɜːdʒə dˈɛfɪsˌɪt], \m_ˈɜː_dʒ_ə d_ˈɛ_f_ɪ_s_ˌɪ_t]\
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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.
By Henry Campbell Black
