Market Entry Strategies:
Acquisition means an event where majority holding in a company is bought by another company simply for the purpose of gaining control over its management. It is believed to be a strategy for growth as it allows a company to expand operations in a niche without investing in infrastructure and management. To acquire a company, another company has to make payment either in cash or by offering its own stock options.
A company can acquire another company in a friendly manner or in a hostile manner.
It is termed friendly when the target company expresses its consent for takeover by another company. On the other hand, hostile takeover is, as the name implies, hostile and the acquiring company completes it deliberately and aggressively by buying stake in the target company against its wishes.
However, whether friendly or hostile, the aggressor offers a premium on the share price of the target company to encourage its shareholders to sell their shares.
There is also an acquisition fee that has to be paid to the lessor who arranges the lease. Acquiring company considers this fee as expenses incurred in the form of commissions. It is up to the lessee to pay this fee wither upfront or add this fee in the total cost of acquisition that is arranged through a loan.