Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Acquiree

What it is:

An acquiree, also called a target, is a company that is purchased by an acquirer.

How it works (Example):

Company XYZ has developed a powerful, new search-engine widget. Several search-engine companies may be interested in purchasing Company XYZ to keep Company XYZ's technology proprietary, and so Company XYZ may become an acquiree.

Why it Matters:

It's not always easy to tell which companies are good targets, but if a company is struggling or it has a large amount of cash on its balance sheet, it's likely that other companies are evaluating the company as an acquiree. Some potential acquirers will take the next step of purchasing shares, and if they purchase more than 5% of those shares, they must report the purchase to the Securities and Exchange Commission if the acquiree is a public company. This often triggers a flurry of trading activity in the target's stock.