What is Acquisition?

An acquisition is a business deal wherein one company buys another company. The acquired company ceases to exist and its assets and liabilities are transferred to the acquiring company.

There are many reasons why companies acquire other companies, including:

  • To gain market share
  • To diversify their product offerings
  • To reduce costs
  • To expand into new markets
  • To gain access to new technology

The acquisition process can be complex and time-consuming. It typically involves the following steps:

  1. Due diligence: The acquiring company must conduct due diligence on the target company to assess its financial health, operations, and legal status.
  2. Negotiation: The acquiring company must negotiate the terms of the acquisition, such as the price of the transaction, the structure of the deal, and the roles of the management team.
  3. Approval: The acquisition must be approved by the shareholders of both companies and by regulatory authorities.
  4. Integration: Once the acquisition is approved, the two companies must integrate their operations and cultures.

Here are some multiple choice questions (MCQs) on what is an acquisition:

  1. Which of the following is a business deal wherein one company buys another company?
    • Merger
    • Acquisition
    • Both merger and acquisition
    • None of the above
    • Answer: Acquisition
  2. Which of the following is a type of merger wherein one company buys the other and the acquired company ceases to exist?
    • Consolidation
    • Acquisition
    • Both consolidation and acquisition
    • None of the above
    • Answer: Acquisition
  3. Which of the following is a type of merger wherein the two companies cease to exist and a new company is formed?
    • Consolidation
    • Acquisition
    • Both consolidation and acquisition
    • None of the above
    • Answer: Consolidation

Answers:

  1. Acquisition
  2. Acquisition
  3. Consolidation

Here are some additional points about acquisitions:

  • Acquisitions can be beneficial for both companies involved, as they can create a more efficient and competitive entity.
  • However, acquisitions can also be risky, as they can be difficult to integrate and can lead to job losses.
  • There are many different types of acquisitions, and the best type for a particular situation will depend on the specific circumstances.