An acquisition is a corporate transaction in which one company purchases most or all of another company’s shares or assets to gain control over that company’s operations and decision-making. This allows the acquiring company to direct the target company’s strategy, assets, and resources
. Key points about acquisitions include:
- The acquiring company typically buys more than 50% of the target company’s shares, which grants it control without needing approval from other shareholders
- Acquisitions can be friendly, with the target company’s approval, or hostile, where control is taken against the target’s wishes
- The purpose of acquisitions varies and can include expanding product lines, increasing market share, achieving cost reductions, gaining new technologies, or eliminating competition
- Acquisitions differ from mergers in that the acquiring company continues to exist as a separate legal entity and takes over the target, whereas mergers combine two companies into a new single entity
- Types of acquisitions include horizontal (buying competitors), vertical (acquiring suppliers or distributors), conglomerate (buying unrelated businesses), and congeneric (acquiring related but different business lines)
In summary, an acquisition is a strategic business move where one company takes over another by purchasing a controlling stake, enabling rapid growth, market expansion, or competitive advantage
