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Acquisition Financing acquisition financing

What is Acquisition Financing? Acquisition financing is one of the most serious types of business financing and is usually intended for strategic merger or acquisition of a rival company for the advancement or protection of a particular business interest. ince the deal will almost always involve staggering amounts of money! the question of financing would always come into play. Although the purchasing party or company may have sufficient funds to cover the purchase! it is usually regarded as a bad practice since doing so may put the finances of the purchasing company in peril. While it is true that the purchasing party can also turn to venture capitalists for assistance! this is proving to be difficult now because of the previous economic turmoil that affected almost everyone. "ne of the most common practices now for any company that wanted to ta#e over or merge with another is to see# the assistance of ma$or ban#s or financial institutions. %epending on the arrangement! the ban# or financial institution could lend enough capitali&ation to the purchasing company for the strategic acquisition or merger as a straight secured loan! or even become a participant itself in the merger or acquisition. This means that the ban# or financial institution may opt to become part owner of the merged or acquired business interest. There are various types of acquisitions but the most common ones are the ta#eover acquisition and merger or buyout. Acquisition financing plays a ma$or role in these two business activities because of the large sums of money involved. 'n ta#eover acquisitions! for instance! the purchasing company would acquire control or full interest of another company through a stoc# purchase or stoc# e(change method. The purchasing company or business entity can also use hard cash or a combination of any of the three methods. ince this type of acquisition would usually involve a considerable amount of money! acquisition financing is warranted. Another type of business activity that may need acquisition financing is a merger. 't is actually a business activity resorted to by companies with the intention of combining their operations and assets to achieve long term goals and increase profitability. ince mergers would also usually involve spending considerable amounts of money! companies that are involved in the merger usually see# the help of ban#s or financial institutions to provide the needed funds for the merger. ome of the best companies that are in e(istence today were products of acquisitions through ta#eover or merger. They availed of acquisition financing to establish their position in the mar#et and e(plore other realms of business possibilities. o if you own a company and see an opportunity for e(pansion by buying or merging with another company! acquisition financing will always be available to you.