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Acquisition refers to the process of acquiring a company at a price called the acquisition price or acquisition premium. The price is paid in terms of cash or acquiring company's shares or both. There are two types of business acquisitions, friendly acquisition and hostile acquisition. In a friendly acquisition, a company invites other companies to acquire its business. In a hostile acquisition, the company does not want to sell its business. However, the other company determined to acquire the business takes the aggressive route of buying the equity shares of the target company from its e isting shareholders. As the motive is to takeover someone else's business, the acquiring company offers to buy the shares at a very high premium, that is, the gaining difference between the offer price and the market price of the share. This entices the shareholders and they sell their stake to earn quick money. This way the acquiring company gets the ma!ority stake and takes over the ownership control of the target company. Acquiring an e isting business enables a company to speed up its e pansion process because they do not have to start from the very scratch. The target company is already established and has all the processes in place. The acquiring company simply has to focus on merging the business with its own and move ahead with its growth strategies. However, in reality, it is not as simple as it seems. "ost of the acquisitions fail miserably due to poor implementation attitude and strategies.
Business "a!uation +usiness valuation or assessment is the first process of merger and acquisition. This step includes e amination and evaluation of both the present and future market value of the target company. A thorough research is done on the history of the company with regards to capital gains, organi$ational structure, market share, distribution channel, corporate culture, specific business strengths, and credibility in the market. There are many other aspects that should be considered to ensure if a proposed company is right or not for a successful merger. &roposa! &(ase ,roposal phase is a phase in which the company sends a proposal for a merger or an acquisition with complete details of the deal including the strategies, amount, and the commitments. "ost of the time, this proposal is send through a non#binding offer document. &!anning +,it %hen any company decides to sell its operations, it has to undergo the stage of e it planning. The company has to take firm decision as to when and how to make the e it in an organi$ed and profitable manner. In the process the management has to evaluate all financial and other business issues like taking a decision of full sale or partial sale along with evaluating on various options of reinvestments. Structuring Business Dea! After finali$ing the merger and the e it plans, the new entity or the take over company has to take initiatives for marketing and create innovative strategies to enhance business and its credibility. The entire phase emphasi$e on structuring of the business deal.
Stage of Integration This stage includes both the company coming together with their own parameters. It includes the entire process of preparing the document, signing the agreement, and negotiating the deal. It also defines the parameters of the future relationship between the two. Operating t(e "enture After signing the agreement and entering into the venture, it is equally important to operate the venture. This operation is attributed to meet the said and pre#defined e pectations of all the companies involved in the process. The "-A transaction after the deal include all the essential measures and activities that work to fulfill the requirements and desires of the companies involved.