Business, Legal & Accounting Glossary
An acquisition takes place where one company – the acquirer – acquires control of another – the acquiree – usually through purchase of shares.
A term used to describe the takeover of a company by another which might be by agreement or hostile.
In a broad sense, an acquisition takes place when one corporation takes over controlling interest of another. An acquisition invariably results in a merger of two companies. When an acquisition occurs, the company that is being acquired is dubbed a target company. Although the term acquisition usually refers to a larger company consuming a smaller one, the outcome of an acquisition is always a formation of a single business entity from assets and liabilities of two separate units. An acquisition can come in the form of a friendly merger between two corporations. It may also come as a hostile takeover, in which the target company attempts to block the acquisition. By and large, acquisitions are sought to consolidate market influence within given industries, as well as to advance profit opportunities. In effect, a successful acquisition is determined by whether or not it has augmented the value of the acquiring company.
The closing of the acquisition is subject to customary closing conditions, including approval of the acquisition agreement by holders of a majority of the companies stock.
We should be able to raise more capital for the acquisition so long as the target company remains profitable.
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This glossary post was last updated: 26th April, 2020 | 7 Views.