You have a beard trimming business that specializes in former ZZ Top members and "reform" Amish. There’s another beard trimming business around the corner close to going broke. They need money. FAST. You don’t want the business itself, but you do want 10 of their superior trimming gadgets, and perhaps a couple of their ultimate luxury massage chairs.
In this instance, you’re using a simple form of an asset acquisition strategy. You’re buying assets, but not stock or ownership in the company itself. The bigger reason you really care about this being an ASSET acquisition of things INSIDE the company rather than the entire corporation? Liability. You have no idea if in the past they’ve poked Amish people, ZZ Tops and other hirsute folk who are all getting together a giant class action suit against you.
If you only buy their trimmers and...well, assets…then the corporate liability doesn’t attach to you. It remains with the owners who continue to own; all you’ve bought there the products inside of it. Much safer way to travel if you have pockets that are deep.
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Finance: What's the difference between m...22 Views
Finance allah shmoop what's the difference between mergers and acquisitions
all right people listen up Merger that's what's about to
happen here it's a merger acquisition that's what's about to
happen here Corporate america is kind of same thing when
two companies merge while they generally you know attracted to
each other hopefully respect each other they share stock or
combined the stocks of each side and you know combine
efforts and then and then cuddle afterwards if they're successful
at the merger than the combination of two roughly equals
yields more than the one plus one combo that made
them so two companies get together on generally equal ish
footing In that case acquisitions are a combining more like
that eating thing on much different footing The large company
eats or buys the target either using its more highly
valued stock currency or it's taft to do so Well
why would a company acquire another Well the target might
have one hundred employees ninety of whom can be fired
with massive expense savings after the acquisition For the acquirer
such that economically the acquisition won't just makes a whole
lot of financial sense acquisitions happen for market power reasons
As well like imagine the negotiating leverage that amazon would
have if it bought the next five biggest online retailers
Or maybe it'll just kill them Probably not legal for
them to buy him anyway given the monopoly like dominance
of amazon these days But wow that would be a
powerful set of acquisitions And that would be a good
reason for ems on to acquire a whole bunch Things
and bezos would grow even more powerful maybe too powerful
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