What is an Acquisition?
Within the realm of both business and commercial activity, an Acquisition is defined as the acquirement of a preexisting business endeavor enacted by another preexisting business endeavor; in many cases, the Acquisition procedure is commonly referred to as a ‘Takeover’ – a takeover, similar to an Acquisition, can exist in a variety of methods:
Merger vs. Acquisition
Although both an Acquisition and a merger may result in the formation of a single company whereas there were once two or more companies, the innate classifications within the procedure vary between a merger and an Acquisition:
A merger takes place when 2 or more companies decide – in a mutual fashion – to combine their respective businesses into a single unit; in many cases, the administrative structure subsequent to a merger includes leadership shared from both preexisting companies
An Acquisition takes place in the event that a single company absorbs 1 or more companies; the decision to partake in an Acquisition may vary between forced and consensual – furthermore, subsequent to an Acquisition, the administrative duties are typically undertaken by the company responsible for the initial Acquisition
Types of Acquisitions
The nature of an individual Acquisition may range in both process, as well as procedure; the following are some of the most common examples of Acquisitions that take place within the commercial market:
1. Vertical Acquisition: A Vertical Acquisition is defined as a variation of Acquisition that takes place between 2 companies or businesses that exist within what is perceived to be a similar industry. In the case of a Vertical Acquisition, the acquisitioned company is not considered to be replaced by the Acquisitioning company in as much as the Acquisitioned company is consider to operate within the realm of the Acquisitioning company.
2. Hostile Takeover: This type of Acquisition typically takes place in a non-consensual fashion on the part of the Acquisitioned Company; the notion of the term ‘hostile’ may suggest that the Acquisition was not enacted in an amicable fashion. As a result, a hostile takeover can serve as troubling for both the Acquisitioned company, as well as the Acquisitioning company as a result of potential sullied lines of communication, resentment, and unwilling participation.
A primary jurisdiction within the scope of laws and legislation surrounding Acquisitions is latent within Antitrust and Competition Law. While the Sherman Antitrust Act is considered to be the initial piece of legislation addressing Antitrust Laws, the Clayton Antitrust Act is classified as being the foremost legislative stipulation with regard to the regulation and authorization of Acquisitions:
The Clayton Antitrust Act expresses that any or all companies or businesses must adhere to regulatory measures and oversight mandated by the Federal government of the United States; in order to avoid the presence – or potential – for monopolies over the commercial market, an individual Acquisition will be required to undergo judicial review
With regard to an individual Acquisition, legal stipulations expressed within the Clayton Antitrust Act surmise that individuals considered to be executives on the boards of businesses participatory in Acquisitions will be prohibited from assuming administrative responsibilities with regard to multiple companies existing within an identical industry