Unit 8. Mergers and Acquisitions

merge

To unite or combine two firms into one.

acquire

To buy or gain control of a company by purchasing its shares or assets.

Raid

Buying large amounts of a company’s shares on the stock market to gain control.

Takeover bid

A public offer to buy shares from a target firm’s shareholders at a specific price and time.

Horizontal integration

Merging with or purchasing firms in the same industry producing similar goods/services.

Vertical integration

Joining firms at different stages of production or distribution.

Backward integration

Acquiring suppliers.

Forward integration

Acquiring distribution or marketing channels.

Synergy

The idea that combined operations create more value than the two companies separately (“1 + 1 > 2”).

Acquisition accounting

A method where the assets and liabilities of the acquired firm are fully consolidated into the parent company’s balance sheet; goodwill is recorded and written off over time.

asset stripping

Buying a company for less than the value of its assets, then selling those assets to make a profit

customer base

All the individuals or organizations that regularly or occasionally purchase goods or services from a company

synergy

Combined production or productivity that is greater than the sum of the separate parts