Acquisition

An acquisition occurs when one company, known as the acquirer, purchases most or all of another company’s shares or assets, thereby gaining control over that company, referred to as the target. This can be a strategy for expansion, entering new markets, acquiring technology or products, or eliminating competition. Acquisitions can take several forms: a stock purchase, where the acquirer buys the target’s stock from its shareholders; an asset purchase, where specific assets are bought directly from the company; or a merger where the acquisition is structured as a merger for tax or legal benefits. The process involves valuation of the target company, negotiation of terms, due diligence to assess financial health, legal issues, and strategic fit, and securing financing if necessary. Regulatory approval is often required to ensure the acquisition does not violate antitrust laws by creating monopolistic conditions. Shareholder approval from the target company is typically needed, and the deal terms can include cash, stock of the acquiring company, or a combination. Post-acquisition, integration is key, involving merging operations, cultures, and systems, which can be complex and require careful management to avoid value destruction. Acquisitions can lead to significant changes in corporate structure, strategy, and workforce, with potential for both growth and disruption.