The acquisition process is develop an existing company
Understanding Acquisitions - The acquisition process is one way to develop an existing company or also save a company that is experiencing capital difficulties.
Broadly speaking, the definition of this acquisition is a transaction in which a company purchases 100 percent ownership of another company to be effective by using core competencies by making the company acquired as a company that supports the business portfolio.
The word acquisition comes from English, namely acquisition or take over, which can be interpreted as a company taking over capital control over another company.
Acquisition comes from the word acquire which can be interpreted as getting something or profit from one's own business.
While the notion of acquisition in the legal world is a legal action to take over all or most of the shares or assets of another company.
Types of Acquisitions
According to Haryani (2019 on Acquisition of Economic Knowledge Journals), there are three types of acquisitions, namely:
Horizontal acquisition
This type of acquisition is an acquisition made by a business entity that still has the same type of business.
Vertical Acquisition
While the type of vertical acquisition is an acquisition carried out by a business entity that has a type of business in the downstream industry with upstream or vice versa.
Acquisition of a conglomerate
Conglomerate acquisition is the acquisition of a business entity that does not have the same or unrelated business fields.
This type of acquisition is usually motivated to develop or expand a conglomerate business.
Benefits of Acquisitions
Here are some of the benefits of the Acquisition, which are as follows:
Get cash flow quickly because you already have a product and the market is clear.
Obtain easy financing because creditors have more confidence in established and established companies.
Get experienced employees.
Get established customers so you don't have to start from scratch.
Obtain an established operational and administrative system.
Reducing the risk of business failure because you don't have to look for new customers.
Can save time to enter a new business.
Get infrastructure in achieving faster growth.
Is a profitable investment.
Get control of other companies.
Can master the supply of raw materials and auxiliary materials.
Diversify businesses.
Enlarge the size of the company.
Minimize business risk.
Minimize the level of business competition.
Acquire new technologies belonging to other companies.
Acquisition Process
The stages in the acquisition process can be different because it depends on the characteristics or criteria of the acquisition and the complexity of the problems to be faced.
The following stages of the acquisition process:
1. Initial Identification
In this initial acquisition process the company will seek and gather various information about companies that have the potential to be acquired.
All information collected aims to look at the characteristics of the company that will be acquired as well as identify the elements needed to obtain in-depth information.
2. Screening
The screening process is the process of screening and selecting potential company targets to be acquired.
In this screening process, it is not necessary if the target of the company to be acquired is only one target.
3. Due Diligence
Due Diligence is a thorough and in-depth investigation of various aspects of the company.
This due diligence has the aim of providing detailed information about the target company's condition in various aspects.
This due diligence will be carried out on the aspects of law, finance, marketing, technology, organization, etc.
4. Negotiation
For the acquisition to run smoothly, there must be agreement between the two parties in the target company, namely management and also shareholders.
If both parties have agreed with the agreed terms between the acquirer and the target, they will make an MOU as a continuation of their negotiation process.
5. Closing
If formal acquisition agreement has been carried out, the next acquisition process is closing.
The definition of closing here is the closing of an acquisition transaction which also means the payment is handed over from the acquirer to the shareholders of the company that has been acquired.