Acquisition

An acquisition is the purchases of one firm by another firm or business organization. Consolidation occurs when two firms combine together in order to form a new firm altogether.  The acquisition might be a public or private, depending whether the merging or acquiree company is not or is listed in the public markets. An acquisition might be hostile or friendly.  Whether a buy is professed as a hostile or friendly based on how it is communicated to and obtained by the target firm, employees, shareholders and board of members.  It is quite common for mergers and acquisition deal communications in order to take place in confidential place, whereby the information flow is confidential because of the confidentiality agreements.

In case of a friendly agreement, the business organizations cooperate in negotiations; if it is a hostile agreement, the takeover target is not ready to be purchased or the target's board will not be aware of the offer. The hostile acquisitions could and frequently do, change friendly at last, since the acquirer secures the approval of the business deal from the management of the acquiree business organization. This generally needs a development in the terms of the offer. The acquisition generally refers to the purchase of the smaller company by a bigger business organization.

At times, however, the smaller business organization would acquire the management control of a bigger established business organization and it keeps its name for the combined entity and this is called as reverse takeover. Reverse merger is another kind of acquisition; it is an agreement which allows a private firm to get publicly listed for a short time period.  The reverse merger happens as the private business organization which has strong prospects and it is ready to raise financing purchases a publicly listed shell company, generally one with limited assets and no business.

Questionnaire:

• What is acquisition?
• What is Consolidation?