Business Studies Takeover Definition

We call the purchaser the bidder or acquirer while the company it wants to buy is the target.

Business studies takeover definition. A merger involves the mutual decision of two companies to combine and become one entity. In this lesson we ll discuss hostile takeovers examine the. Many studies on the performance of takeovers have been completed over the years and they consistently show that a large percentage of takeovers destroy value for the shareholders of the acquiring firm in other words most takeovers fail.

It is a type of merger but not of equals. Amalgamation when two or more separate companies join together to form one company so that their pooled resources generate greater common prosperity than if they remain separate. The target business is then usually absorbed into the operations of the business that initiated the purchase.

An acquisition is a corporate action in which one company purchases most or all of another company s shares to gain control of that company. The firm which has taken it over. What potential risks could be attached to the two different methods.

Acquisition when one company is taking over controlling interest in another company. The combined business through structural and operational advantages secured by the merger can cut costs and increase profits boosting shareholder values for both groups of shareholders. In the case of an acquisition there is a predator and a prey.

It can be seen as a decision made by two equals. An acquirer may choose to take over controlling interest of the company s outstanding. Sometimes a company is acquired by another company against its wishes a hostile takeover.

Merger where 2 or more businesses agree to join to form a new company. A takeover or acquisition is the purchase of one company by another. The following is a glossary which defines terms used in mergers acquisitions and takeovers of companies whether private or public.