to purchase most of a company's stocks or gains in exchange for the company itself.
How Acquire Works
Acquire is the verb form of the noun "acquisition." When a company decides to acquire another company, it is because they are planning an acquisition. A company acquires another company when they purchase 50% or more of its shares. It doesn't matter whether the other company agrees to the acquisition or not; once those shares are purchased, the acquisition is a done deal.
If the acquired company agrees to it, however, there is usually a no-shop clause involved. A no-shop clause means that the selling company cannot "shop around" for a higher bid once there is a letter of intent. Acquisitions are incredibly common among small- to medium-sized businesses but rarer among large companies.
Real-Life Example of Acquire
Unsplash, a royalty-free stock photo website, was acquired by Getty Images, a British-American visual media platform based in Seattle, Washington, on March 30, 2021. Unsplash started in 2013 as a Tumblr blog and has since grown into a major entity. Now that Getty Images has acquired it, Getty can reach the creative audience who primarily uses the platform. Unsplash still operates as its own entity, and the staff who worked there pre-acquisition will still be there, but the division will be under Getty Image influence.
The CEOs of both Unsplash and Getty Images had been in talks about combining their forces since 2016, but it took some convincing on Unsplash's end. Eventually, the company saw that Getty's long-term plan aligned with theirs and moved forward with the acquisition (Unsplash.com).
Now that Getty Images acquired Unsplash, Unsplash will now have the resources to expand its brand and hire more people to increase their image downloads and grow their Unsplash Hire department.
Significance of Acquire
When a company acquires another company, both organizations subsequently become more powerful. An acquisition joins the best of both worlds under one company's control—the two company's do not necessarily function as one company. Unfortunately, this results in a loss of power for one company, but if the companies work out acquisition terms fairly, it'll be a win-win instead of a loss-win.
If a larger company acquires your company, you'll have increased financial resources, a more prominent market presence, and will meet stakeholders' growth expectations. Not to mention, if your company is still in its baby stages, being acquired by a company that sees your potential is a way to skip many market hurdles.
There is a risk to it, however. Being acquired by another company could result in fees that outweigh the positive financial resources. You run the risk of being matched with a company that doesn't understand your company's mission. In other words, it could end up being too much trouble than it's worth.
Acquire vs. Merge
When a company acquires another company, it means that the buying company purchases the selling company's assets. It doesn't always mean that the selling company will have to operate as one entity with the buyer, but it does mean that the buying company ultimately controls the seller's brand. In a merger, two companies agree to merge—or consolidate assets and functions—and work as one entity.