Acquisition

An acquisition is a transaction in which one company, the acquirer, buys most or all of another company's shares or assets in order to take control of it. The company being bought, the target, may continue as a subsidiary or be absorbed into the buyer. Acquisitions are one of the main tools companies use to grow, enter new markets, gain technology or talent, or remove a competitor.

Acquisitions are usually discussed alongside mergers under the heading mergers and acquisitions. In a merger, two firms combine more or less as equals, often into a new entity; in an acquisition, one firm clearly takes over the other. A related term, amalgamation, is used in some legal systems for combinations that create a new company. Deals are shaped by company law, securities regulation and competition authorities.

Think of a bakery that buys the café next door. It could buy the café's whole business, including its name, staff and debts, by buying the shares from the owner. Or it could buy just the ovens, the lease and the recipes, leaving the old company behind as an empty shell. Either way, the bakery now controls what used to belong to someone else.

Big company acquisitions follow the same pattern, just with more lawyers. The buyer checks what it is getting, agrees a price, gets permission from regulators if the deal is large, and then has to make the two businesses work together, which is often the hardest part.

• Share purchase. The buyer acquires the target's shares from its shareholders and takes on all its assets and liabilities.
• Asset purchase. The buyer picks specific assets and contracts, leaving unwanted liabilities with the seller.
• Friendly or hostile. A friendly deal has the target board's support; a hostile bid goes directly to shareholders, often through a tender offer.
• Horizontal, vertical or conglomerate. The target may be a competitor, a supplier or customer, or a business in an unrelated field, the last forming a conglomerate.
• Leveraged buyout. In a leveraged buyout, usually led by private equity, much of the price is funded with debt secured on the target.

Most deals follow a broad sequence:

1. Approach and terms. The buyer proposes a price and structure, often in a letter of intent or term sheet.
2. Due diligence. The buyer examines finances, contracts, licences and legal risks through due diligence.
3. Valuation and price. Public targets usually require an acquisition premium over the market price to win shareholder support.
4. Approvals. Shareholders, competition regulators and, in regulated sectors, financial supervisors must approve. A change of control in a bank or licensed payment firm usually needs prior regulatory consent.
5. Closing and integration. Payment is made in cash, shares or both, and the businesses are combined.

After closing, the buyer includes the target in its consolidated financial statements, recording any excess of price over the fair value of net assets as goodwill.

Large acquisitions are reviewed by competition authorities, which can block deals or demand remedies if they would reduce competition, the core concern of antitrust law. In the United States, deals above a size threshold must be notified under the Hart-Scott-Rodino Act; the EU, UK and other jurisdictions have similar regimes. Takeovers of listed companies are governed by securities and takeover rules on disclosure and equal treatment of shareholders. Financial services add a further layer: acquiring a licensed money transmitter, e-money institution or crypto firm usually requires the buyer's owners and managers to pass fit-and-proper checks before the deal can close.

The crypto industry has seen many acquisitions as exchanges and infrastructure firms expand. In 2020 Binance acquired the price-tracking site CoinMarketCap, and in 2025 Coinbase agreed to buy the derivatives exchange Deribit. Licensed businesses are frequent targets, because buying a firm that already holds a licence can be faster than applying from scratch, although regulators still review the change in ownership. Token projects sometimes "acquire" other projects through token swaps rather than cash, which raises its own valuation and governance questions.

Studies have long found that many acquisitions fail to create value for the buyer's shareholders, often because the price was too high or integration went badly. Culture clashes, loss of key staff, hidden liabilities and over-optimistic synergy estimates are common problems. Critics also argue that serial acquisitions by dominant firms can harm competition, and that leveraged deals can lead to asset stripping or excessive debt. Careful due diligence, realistic pricing and clear integration plans reduce, but do not remove, these risks.