What is Acquisition and Merger?
Acquisition and merger are both methods by which companies consolidate with one another. An acquisition occurs when one company purchases another, either through buying its shares or assets, thereby obtaining control.
In a merger, two or more companies voluntarily combine to form a new entity, with neither party retaining its original identity. Both strategies are used to grow in size, enter new markets, achieve synergies, or acquire new technologies and capabilities.
What is the Difference Between an Acquisition and an M&A?
While the terms "acquisition" and "M&A" (mergers and acquisitions) are often used together, they refer to different processes. An acquisition is a specific act where one company takes over another, either by buying a controlling stake or the entire company.
M&A, on the other hand, is a broader term encompassing both mergers, where companies combine to form a new entity and acquisitions. Thus, an acquisition is a subset of M&A, and the difference lies in the nature and structure of the consolidation.
What is an Acquisition in Business?
An acquisition in business refers to the process where one company obtains control of another by purchasing its shares, assets, or a combination of both. This can be achieved either through a friendly agreement or a hostile takeover, depending on the consent of the target company's management and shareholders.
Acquisitions allow companies to expand their market presence, acquire new technologies or talents, reduce competition, or gain access to new geographic regions.
What are the Types of Acquisition?
Acquisitions can be categorized into different types based on their nature and objectives. Strategic acquisitions aim to enhance long-term growth and competitive positioning.
Financial acquisitions focus on short-term financial gains, often carried out by investment firms.
Horizontal acquisitions involve the acquisition of a competitor in the same industry, while vertical acquisitions relate to buying a supplier or distributor within the same supply chain.
Conglomerate acquisitions entail purchasing a business in an entirely different industry, and friendly acquisitions occur with the consent of the target company, whereas hostile acquisitions are pursued without such agreement.
These various types reflect the wide array of strategies and goals behind acquisitions in the business world.