An acquisition occurs when one firm buys the majority of all the shares of another company to take control of that company. When more than half of a target company’s shares and other assets are bought, it gives the acquirer the authority to make decisions concerning the newly acquired assets without taking any permission of the other shareholders. Acquisitions, which are quite prevalent in business, can take place with or without the target company’s agreement. There is frequently a no-shop provision during the approval procedure.
Friendly acquisitions occur when the target company accepts to be purchased and the transaction is approved by the target company’s board of directors. It’s very common to have acquisitions that are friendly to both the acquiring and target firms. Both firms develop procedures which guarantees that the purchasing company buys the right assets, and the financial statements and other values are examined for any potential liabilities.
The acquisition begins once both the parties agrees to the terms and meet necessary legal requirements.