In corporate terms, an acquisition is the purchase of a company or the division of a company. Some acquisitions are paid in cash, while others are paid with a combination of cash and the acquiring company's stock. Some are even financed with debt, which is called a leveraged buyout.Acquisitions are often done by another company in a similar line of business who wishes to use the purchased business to improve its own operations. Sometimes a company may buy a direct competitor simply to control more of the marketplace. This may reduce its costs if the company can eliminate some of the duplicated overhead. Some acquisitions are done by companies in an unrelated field, in order to diversify their business. An acquisition may also be done by a financial company or an individual financier primarily to re-sell the purchased company at a profit. This is similar to a person who flips houses—he or she buys the house, improves it, and sells for a profit. In a corporate situation, the buyer believes it can improve the company and raise share price, creating profit when sold. Acquisitions can be considered friendly, or hostile. When the Board of Directors approves the purchase before it happens, the acquisition is considered friendly. This kind of deal usually goes through in a transparent and cooperative manner. A hostile acquisition, or hostile takeover, occurs when the board rejects the offer, but the buyer tries to purchase the company anyway by buying a controlling amount of stocks. This usually results in an incomplete acquisition, where the buyer can control the company, even without fully acquiring it.
