What is an Acquisition?
An acquisition is a business transaction that involves a business fully or partially purchasing another business/asset for the main purpose of expansion and control. However, for the new business to assume control, it must purchase at least 50% shares of the other business. Typically, after an acquisition one firm becomes the parent company to the other although they both continue to exist independently.
In the end, the goal is for the parent company to diversify their portfolio, enter new markets, or achieve some specific business objectives through this acquisition. To start and finalize this sort of transaction, there is always a need for a corporate lawyer.
Acquisition – Example
For example, Facebook (now Meta) purchased WhatsApp for $19 billion in 2014 for the purpose of reaching more users across the world through instant messaging. This move singlehandedly made Facebook the leading instant messaging app company with over a billion users.
There are several forms/types of acquisitions as highlighted below:
- Asset acquisition
- Horizontal Acquisition
- Vertical Acquisition
- Conglomerate Acquisition
- Stock Acquisition
Related Terms
Other related business transactions to acquisitions are merger, takeover, and amalgamation.
