The acquisition is a good business option to buy a majority share of another business’s stock to gain control of it. It is a proven method for expansion and growth for your company, employing three strategies: mergers, acquisitions, and takeovers. Each has its advantages and disadvantages.
With three strategies to choose from – mergers, acquisitions, and takeovers, it is up to you to decide which to choose. Today’s media are always trumpeting the mergers and acquisitions of industries’ Big Boys,’, IBM, General Motors, and other titans of industry, when, in fact, it is the smaller companies who more often use those same tools as an essential part of their business strategy.
These options can be useful if you are trying to penetrate either a foreign or domestic market. It makes economic sense to purchase the majority stock in a recognized company with an already established brand either overtly or covertly than spending your money trying to break into an unfamiliar market.
Acquisition by takeover, whether hostile or friendly, can eliminate competitors. In a friendly takeover, one company agrees to purchase the majority shares of another company’s stock with the knowledge and approval of the company being acquired. It can be as a growth strategy or to create another company entirely.
A hostile takeover differs because the targeted company’s stock (at least 51%) is acquired without consent. Stockholders of the targeted company have no input into their company’s acquisition. The hostile company is not required to consult with them before decisions are made.
Financing an acquisition is a two-step process. Your funding source requires are series of documents to support your acquisition funding request based on your ability to repay your loan according to its terms and conditions and your ability to manage the company you want to acquire. The lender evaluates the company to be acquired in the second step, reviewing its history, finances, performance, and compatibility with your company.
Acquisitions, mergers, and takeovers can be expensive. Finding the right loan program is half the battle. Our experts at K-WAM will connect you with the right lender. For additional information, send a message to our team, Click here.