Acquisition
Acquisition is the process of obtaining or procuring something, typically through financial investment or negotiation. It is a common business strategy adopted by both small and large companies alike, as it allows them to purchase a company or its assets, absorb another company’s resources and talent, and expand their access to new markets.
A scenario that explains the process of an acquisition:
XYZ Corp, publicly traded and with over two decades of experience in the software industry, is renowned for its solid standing amongst peers. Now they’re looking to take on a fresh challenge by broadening their product range and venturing into an unexplored market segment.
After conducting market research, they pinpointed ABC Inc. as a potential acquisition target. It is a private company that specializes in cloud-based software solutions and already has reliable customers in the market sector they are targeting.
XYZ Corp and ABC Inc. spent months negotiating a potential acquisition, with the former agreeing to acquire all of the latter’s outstanding shares in exchange for cash & stock. This agreement sealed the deal, officially initiating an acquisition process between both companies.
Once the purchase of ABC Inc. is complete, XYZ Corp sets in motion the process of blending it with their own setup. This includes moving over employees, combining financial documents, and aligning operational procedures. The integration process takes several months and requires careful planning and coordination to ensure a smooth transition.
Through the acquisition, XYZ Corp was able to break into a new industry sector while broadening their product range. ABC Inc’s software, tech, and customer base were instrumental in improving their profits & market presence.
Furthermore, XYZ Corp was able to benefit from ABC Inc.’s positive public image and experience to increase their reliability within a fresh market segment.
By acquiring a company, XYZ Corp was able to enter into a fresh market segment, give its portfolio of products a boost and obtain an impressive customer base. This yielded more profits and enabled them to gain more market presence.
The acquisition process can be challenging and requires careful planning and coordination, but the benefits can be significant if done correctly.
These acquisitions are some of the most notable and important ones in recent history. They were made by well-established companies and helped them to expand their businesses, gain more customers, and increase revenue.
- Facebook’s acquisition of Instagram in 2012 for $1 billion
- Google’s acquisition of YouTube in 2006 for $1.65 billion
- Microsoft’s acquisition of LinkedIn in 2016 for $26 billion
- Amazon’s acquisition of Whole Foods in 2017 for $13.7 billion
- Disney’s acquisition of 21st Century Fox in 2019 for $71.3 billion
- Walgreens Boots Alliance’s acquisition of Rite Aid in 2018 for $4.4 billion
- Cisco’s acquisition of AppDynamics in 2017 for $3.7 billion
- Intel’s acquisition of Mobileye in 2017 for $15.3 billion
- Salesforce’s acquisition of Tableau in 2019 for $15.7 billion
- Oracle’s acquisition of Sun Microsystems in 2010 for $7.4 billion
