An Acquisition is defined as the corporate action in which one company purchases or merges with another company.
Acquisition is one of the parts of company’s growth strategy that could occur depending on the type of ownership of the sellers. Acquisitions can be either friendly or hostile in nature depending on the interest of the target company. Generally, when a publicly-traded company is sold, the buying entity usually offers a premium on all of the available stock options for initiating the acquisition process. Negotiations are made regarding various aspects of the intention of the purchaser like future goals, benefits offered to the existing employees and many more. Some of the necessary financial details needed to evaluate the value of a company for acquisition include profit & loss account, tax receipts, inventory levels, financial debts, order book and many more.
Acquisitions are often paid in cash, acquiring company’s stocks or a combination of both. Acquisition process is considered to be completed once the buyer has taken full possession of the company and has made required changes in the management staff.