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Acquiree

Definition - What does Acquiree mean?

An acquiree is the company that is being purchased under a corporate acquisition. The organization that is buying another one is called an acquirer. The acquiree is also known as the target firm.

Acquisitions are a common occurrence in the corporate world and it is a practice by which one organization takes over the operations of another, in return for a stipulated amount of money.

Divestopedia explains Acquiree

Acquisitions take place mostly between organizations, where one organization feels that it is more beneficial to take the operations of another organization instead of expanding its own. It is a growth strategy followed by both privately and publicly traded companies.

If the acquiree is a publicly traded company, then it can see some changes in the price of its shares that are based on the amount paid by the acquirer. If the acquirer paid a higher price than what the acquiree is worth, then the share prices will move up. On the other hand, if the price paid by the acquirer is lower than the current worth of the acquiree, then the share prices of the latter will drop.

The acquirer will arrive at a deal based on many factors such as the current market value of the acquiree, its future potential, fair value of the business that is likely to be acquired and the strategic importance of the acquiree for the growth and expansion plans of the acquirer.

When the operations are acquired, it can result in substantial changes for the acquiree that could include re-organization, change of strategy and business operations and sweeping lay-offs. In fact, the very identity and name of the acquiree could be lost in acquisition deals, though some acquirers may continue to run the operations as it is without substantial changes. It depends mostly on the growth and integration strategy of the acquirer.

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Resources

  • Equicapita: Equicapita
    Equicapita's model is to acquire established, private small and medium sized enterprises (“SMEs”) located primarily in Western Canada.
  • Evolution Capital: Evolution Capital
    Leaders in growing small business.