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What is Acquisitions?

An acquisition is when one company purchases most or all of another company's shares to gain control of that company. Purchasing more than 50% of a target firm's stock and other assets allows the acquirer to make decisions about the newly acquired assets without the approval of the company’s shareholders. Acquisitions, which are very common in business, may occur with the target company's approval, or in spite of its disapproval. 

The acquiring company buys the shares or the assets of the target company, which gives the acquiring company the power to make decisions concerning the acquired assets without needing the approval of shareholders from the target company.

Types of Acquisitions

There are various takeovers according to the type of acquiring a business and the business being acquired and also the method required for acquiring business to purchase the other. The various types of acquisition are as follows:


  • Friendly Takeover:- The takeover when both the companies agree for the takeover is known as a friendly takeover. The shareholder of the acquired company gets cash or may receive some number of shares from the acquiring company.

  • Hostile Takeover:- In this takeover, one company acquires the other company without agreement. It is done only in public business because the acquiring companies take control of shares in the stock of the target company.


  • Reverse Takeover:- In the reverse type of the takeover, the small company buys the bigger company or private company buys the public company for avoiding the security regulation required to become a public company.


  • Back-Flip Takeovers:- This is a rather uncommon type of takeover in which the acquirer company becomes a subsidiary of the target company. After the takeover, the business is carried out in the name of the acquired company.

Process of Acquisitions
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Benefits of Acquisitions

  • Reduced entry barriers:-With M&A, a company is able to enter into new markets and product lines instantaneously with a brand that is already recognized, with a good reputation and an existing client base. An acquisition can help to overcome market entry barriers that were previously challenging. Market entry can be a costly scheme for small businesses due to expenses in market research, development of a new product, and the time needed to build a substantial client base.
  • Market power:- An acquisition can help to increase the market share of your company quickly. Even though competition can be challenging, growth through acquisition can be helpful in gaining a competitive edge in the marketplace. The process helps achieves market synergies.
  • New competencies and resources:- A company can choose to take over other businesses to gain competencies and resources it does not hold currently. Doing so can provide many benefits, such as rapid growth in revenues or an improvement in the long-term financial position of the company, which makes raising capital for growth strategies easier. Expansion and diversity can also help a company to withstand an economic slump.
  •  Access to experts:-When small businesses join with larger businesses, they are able to access specialists such as financial, legal or human resource specialists.
  • Access to capital:- After an acquisition, access to capital as a larger company is improved. Small business owners are usually forced to invest their own money in business growth, due to their inability to access large loan funds. However, with an acquisition, there is an availability of a greater level of capital, enabling business owners to acquire funds needed without the need to dip into their own pockets.
  • Fresh ideas and perspective:-M&A often help put together a new team of experts with fresh perspectives and ideas and who are passionate about helping the business reach its goals.






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