What are Acquisitions?

Also called a buyout or takeover, acquisitions are the process by which one company purchases another company, often changing the name to match their own, to expand its profits, market share or operations.

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Types

2. An acquisition may be friendly, in which case the company taken over cooperates in the deal. Hostile acquisitions, or hostile takeovers, occur when one company buys another without consent or cooperation.

Effects

3. Often, when a company is bought, there may be massive layoffs, and many of the top executives will be replaced at a rate much higher than average.

Benefits

4. Acquisitions allow a company to expand their operations without creating another company, or having to set up new corporate infrastructure.

Mergers

5. Acquisitions are often synonymous with mergers, but in a merger, both companies emerge with their corporate branding and infrastructure relatively intact, or a hybrid is created.

Transition Firms

6. Corporations will sometime employ specialized transition firms to advise them on how to perform a smooth acquisition. These firms are strictly advisers and do not provide financing.