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Mergers and Acquisitions Key Concepts

Acquisitions


Acquisitions

Acquisition refers to the process of buying something. In commercial language, an acquisition means either the process of acquiring a business or shares in a company. By buying the whole of the shares in a company, a buyer will become the owner of the company including its business. By acquiring only 51% of the shares in a company, the buyer will become the major shareholder of a company with the capability of making important decisions as to the running of the business and future strategy of the company.

In certain cases the acquisition of shares of a company may not be attractive and a buyer will only be interested in acquiring the business of a company. This will involve the acquisition of certain interesting assets of the company but not its liabilities. In each case, the acquisition will be made by signing an acquisition agreement which will stipulate in detail the conditions of the purchase. The parties will negotiate the purchase price based on the market value of the shares or assets and the vendor will be required to give certain warranties in respect of the business.

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