In general, an acquisition is a transaction in which one company absorbs another via a takeover<\/a>. The term merger is used when the purchasing and target companies combine to form a completely new entity. Each deal is unique and can contain elements of both a merger and an acquisition.<\/p>"
}
}
,
{
"@type": "Question",
"name": "Why Do Companies Acquire Other Companies?",
"acceptedAnswer": {
"@type": "Answer",
"text": " Two of the key drivers of capitalism are competition and growth. When a company faces competition, it must cut costs, innovate, or both. One solution is to acquire competitors<\/a> so that they are no longer a threat.<\/p> Companies also grow by acquiring new product lines, intellectual property, human capital, and customer bases. By combining business activities, overall performance efficiency tends to increase, and across-the-board costs tend to drop as each company leverages the other company's strengths.<\/p>"
}
}
,
{
"@type": "Question",
"name": "What Is a Hostile Takeover?",
"acceptedAnswer": {
"@type": "Answer",
"text": " Friendly acquisitions are more common. In these instances, the board of directors and shareholders of the company being acquired approve of the acquisition.<\/p> Unfriendly acquisitions, or hostile takeovers, occur when the target company does not consent to the acquisition. To succeed, the acquiring firm must purchase large stakes in the target company to gain a controlling interest and force the deal through.<\/p>"
}
}
]
} ] }
]