Acquisition

An acquisition is defined as a company or entity acquiring or taking possession or securing property, services, or abilities.

In finance, this acquisition generally deals with certain elements of business such as property clients, technology, etc., that a company embarks on to ultimately taking ownership or possession of.

These types of deals can be very important for shareholders and by extension stock prices, creating abrupt jumps in prices for acquired companies.

Why do Companies Rely on Acquisitions for Growth?

The term acquisition is most often used when referring to taking control of a company. An acquisition can be either an agreed deal or a hostile takeover.

Most commonly, an acquisition is when one business, person, or company purchases most if not of another company's shares to gain control of that company.

Ownership of a company can be as simple as owning over 50% of stock shares.

As such, buying 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.

There are several types of acquisitions that one speaks of when referring to either mergers or acquisitions.

A horizontal acquisition occurs when two companies come together with similar products/services.

By extension, a vertical acquisition means two companies join forces in the same industry, but they are at different points on the supply chain.

A conglomerate represents two companies in different industries join forces, or one takes over the other to broaden their range of services and products.

Finally, a concentric acquisition occurs when companies will share customers but provide different services.