What is acquisition?
Acquisition refers to a situation where one company takes over another by purchasing a controlling or full ownership stake.
In simple terms, it means a business buys another business to gain control of its operations, assets, and market position.
A company usually completes an acquisition by buying shares, assets, or both, often paying in cash, stock, or a combination of the two.
Types of acquisition
Acquisitions generally fall into two main categories:
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Friendly acquisition: Happens when both companies agree to the deal and work together on the transition.
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Hostile acquisition: Occurs when the target company does not agree, and the buyer gains control by purchasing a majority of shares.
Example of acquisition
A large tech company buying a startup to gain access to new technology is a common example of an acquisition.
This allows the acquiring company to grow faster and strengthen its competitive position.
Why do companies make acquisitions?
Companies use acquisitions as a growth strategy. Common reasons include:
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Expanding into new markets
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Gaining technology, talent, or intellectual property
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Increasing market share
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Reducing competition
In many cases, acquiring an existing business is faster than building capabilities from scratch.
How are acquisitions paid for?
An acquisition can be financed in several ways:
The buyer may also pay a premium above the current market value to secure control of the target company.
Acquisition vs merger
Acquisitions and mergers are often grouped together as M\&A (mergers and acquisitions), but they are not the same.
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