An acquisition deal is the purchase of one business or company by another. The acquiring company can be looking for ways to expand into new markets and product lines, or it may be trying to eliminate redundancies and focus on its most profitable business activities. The acquiring company can also seek to acquire smaller companies that have the potential to become more profitable in the future. Federal watchdogs often keep an eye on acquisition deals that may affect consumer prices or service levels.
The acquisition process usually starts with a high level discussion between the companies involved. The two sides discuss how they can best integrate the businesses, if there are any synergies that can be realized. The next step is a detailed evaluation of the business, including a financial report and the breakdown of assets. The company seeking to make the acquisition can then decide whether or not to proceed with the process.
Once the evaluation stage is complete, negotiations will take place. During this phase, both the companies will try to come to an agreement on a price. If the agreement is reached, both parties will sign a Share or Assets Purchase Agreement (SPA) detailing the terms of the sale.
There are many different types of acquisition deals, and they vary depending on the type of business being acquired. For example, a congeneric acquisition is when the acquiring company and the acquired company sell similar products or services to the same market. In this case, the acquiring company can increase market share and product lines quickly by acquiring the company.