An acquisition is when one company purchases most or all 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 despite its disapproval. With approval, there is often a no-shop clause during the process.
Reasons for acquisition
• To Enter a Foreign Market
• As a Growth Strategy
• To Reduce Excess Capacity and Decrease Competition
• To Gain New Technology