What it is:
How it works/Example:
Company XYZ wants to acquire Company ABC. Company XYZ might just start buying ABC open , but once Company XYZ acquires 5% of ABC, it must formally (and publicly) declare how many it owns to the Securities and Exchange . Company XYZ must also state whether it intends to buy ABC or just hold its existing as an . In either case, Company XYZ is an acquirer. The term is mostly used in the context of purchasing a majority of another company, however.on the
Why it matters:
Acquirers often make acquisitions with cash, but they also use debt and their own stock as well, and there are often tax consequences associated with each form of currency.
Acquirers acquire other companies because they think they can create a bigger, more competitive, more cost-efficient entity. This synergy -- that is, the idea that the two companies together are more valuable to the shareholders than they are apart -- is elusive, but it is what justifies most acquisitions. After all, acquirers always have the much harder of trying to "grow their own" by starting their own competitive ventures instead of buying someone else's. Targets sell their companies to acquirers because at the end of the day, the price is right. And on both sides, a well-executed can be the crowning jewel of a 's career.