The Legal Forms Of Acquisitions

There are three basic legal procedures that one firm can use to acquire another firm:

1. Merger or consolidation

2. Acquisition of stock

3. Acquisition of assets

Although these forms are different from a legal standpoint, the financial press frequently does not distinguish between them. The term merger is often used regardless of the actual form of the acquisition.

Ross et al.: Fundamentals of Corporate Finance, Sixth Edition, Alternate Edition

VIII. Topics in Corporate Finance

25. Mergers and Acquisitions

© The McGraw-Hill Companies, 2002

CHAPTER 25 Mergers and Acquisitions

In our discussion, we will frequently refer to the acquiring firm as the bidder. This is the company that will make an offer to distribute cash or securities to obtain the stock or assets of another company. The firm that is sought (and perhaps acquired) is often called the target firm. The cash or securities offered to the target firm are the consideration in the acquisition.

0 0

Post a comment