What is the primary purpose of a Triangular Merger?

A Triangular Merger primarily serves the purpose of retaining statutory merger benefits while avoiding seller liabilities. In this form of merger, the acquiring company creates a subsidiary to purchase the target company, which allows the parent company to benefit from the merger's legal protections, including any tax advantages or streamlined regulatory approvals that might accompany a traditional merger. By structuring the deal this way, the liabilities of the acquired company are significantly minimized for the acquiring company, as the merger occurs through a subsidiary rather than directly involving the parent corporation.

This method allows the buyer to effectively leverage the assets and operations of the target company while isolating potential liabilities that could arise post-acquisition. As a result, it is particularly attractive for acquirers looking to mitigate risks associated with inherited debts or legal issues from the selling entity.

In contrast, enhancing the buyer's market share, creating a wholly-owned subsidiary, or fostering joint ventures are ancillary benefits or different strategic goals that do not capture the primary legal and financial motivation behind a Triangular Merger. Those other options do not address the specific structural and liability considerations that define this merger type.