ACQUISITION

ROHITH BIDADI
4TH SEM BBA. LLB
 CONTENTS

• INRTODUCTION • IMPACT OF ACQUISITION

• WHAT IS ACQUISITION ? • ADVANTAGES
• WHY MAKE AN ACQUISITION ? • DIS-ADVANTAGES
• DIFFERENT TYPES OF ACQUISITION • SUMMARY
• WAYS OF FINANCING ACQUISITION • REFERENCE 
• ACQUISITION PROCESS
INTRODUCTION

An acquisition is when one company purchases most or all of another company's shares to
gain control of that company

An acquisition is when one company takes over another company, and the acquiring
company becomes the owner of the target company. In other words, the acquired company
no longer exists following an acquisition since it has been absorbed by the acquirer.
WHAT IS ACQUSITION ?
—An acquisition is a corporate action in which a company buys most (50% or more), if not all, of
another firm's ownership stakes to assume control of it. 

An acquisition occurs when a buying company obtains more than 50% ownership in a target company.

Acquisitions can be paid for in cash, in the acquiring company's stock or a combination of both.

As part of the exchange, the acquiring company often purchases the target company's stock and other
assets, which allows the acquiring company to make decisions regarding the newly acquired assets
without the approval of the target company’s shareholders.
WHY MAKE AN ACQUISITION ?

• To achieve economies of scale, greater market share, increased

synergy, cost reductions, or new niche offerings.
• To expand their operations to another country.
•  Acquisitions are often made as part of a company's growth strategy
when it is more beneficial to take over an existing firm's operations
than it is to expanding on its own.
•  If a new technology emerges that could increase productivity, a
company may decide that it is most cost-efficient to purchase a
competitor that already has the technology.
DIFFERENT TYPES OF ACQUISITION

FRIENDLY ACQUISITION HOSTILE ACQUISITION

WAYS OF FINANCING
AN ACQUISITION

• Private equity financing

• Equity financing 
• Bank financing
• Asset-based financing
ACQUISITION PROCESS
Preliminary Assessment or Business Valuation.
1
Phase of Proposal.
2
Exit Plan.
3
Structured Marketing.
4
Stage of Integration.
IMPACT OF ACQUISITION

EMPLOYEES IMPACT ON TOP LEVEL SHAREHOLDERS OF SHAREHOLDERS OF

MANAGEMENT THE ACQUIRED FIRM THE ACQUIRING FIRM
ADVANTAGES

Increased speed Lower risk comparing to 

Increased market share.
to market  develop new products

Avoid
Increased diversification
excessive competition
DIS-ADVANTAGES

Inadequate Inability to
valuation of Achieve
Target Synergy

Finance by
taking Huge
Debt
SUMMARY
• An acquisition is when one company purchases most or all of
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 other shareholders.
REFERENCE
• https://www.investopedia.com/
• https://www.accountingtools.com/
• https://www.upcounsel.com/