Acquisition

What is Acquisition?

An acquisition occurs when one company (the acquirer) purchases a controlling stake in or the entirety of another company (the target), with the buyer gaining control of the target's assets and operations. Acquisitions can be friendly (target management agrees) or hostile (acquirer bypasses management and goes directly to shareholders). Payment can be cash, stock, debt, or a combination. The acquirer typically pays a premium above the target's current market price to persuade shareholders to sell. Key metrics used in valuation include EV/EBITDA, price-to-sales, and discounted cash flow models.