An acquisition is the act of one company purchasing the shares or equity of another company. This leads to a change in ownership and control, and it can be done either friendly or hostile. Companies usually pursue acquisitions to increase market share, gain access to new technologies and reach economies of scale.
Companies that focus on acquisition often have a clear strategy that guides them through the entire process. They first need to fully evaluate the business world including the economy, customers and competitors. They should also look at the current state of their own company and its operations. This will help them identify areas where the acquired company can complement their own efforts. The next step is to create an evaluation matrix that can be used to prioritize and compare potential targets. Finally, they need to make sure that their target has the resources to meet their financial obligations and any legal stipulations that might be involved.
The most important aspect of acquisition is to clearly define your primary objectives. This will help you to streamline your efforts towards a specific outcome and to avoid unnecessary investments. It is also critical to understand the unique benefits that can be gained from M&A, such as increased market share, improved products and services, and a faster entry into new markets. M&A can also be an attractive option for companies that are limited by physical or logistical constraints and those that have depleted their existing resources.