Companies acquire other companies for various reasons. Increased sales and bringing new customers are the most important tasks for any company. To make the process easier, companies acquire other companies which not only bring in the stocks but also their stakes. Company’s acquisition also helps to bring in the smartest employees to sit together and prosper the business of one company rather than competing each other (Balls, 2012). Also, it opens new horizons for the company in case of customer satisfaction, new markets, and more advanced technologies. For Instance, Google paid $25 million for DocVerse to get its technology that allows users to have a better interface of sharing documents that accelerated the adoption of GoogleDocs to a very high extent (James, 2002). High prices during the past decade, the culture of acquiring a company has tremendously increased. Nevertheless, most of these acquisitions, later, turned out to be wrong decisions. One of the main reasons was high payments for the acquisitions. It is not, however, that acquirers pay too high a price in an absolute sense. Rather, as per today’s market, the acquirer has to pay more than the intrinsic value of the company which usually not calculated correctly (Victor, 2011). Acquiring Companies.
1. Balls, A. (2012, January 28). Big firms lose value in acquisitions. Retrieved from http://www.nber.org/digest/aug03/w9523.html
2. James, E (2002). Redefining the corporation. Stanford University Press Retrieved from http://www.sup.org/book.cgi?id=1967
3. Wilson, C., & Lanes, K. (1999, July 1). Are you paying too much for that acquisition?. Retrieved from http://hbr.org/product/are-you-paying-too-much-for-that-acquisition/an/99402-PDF-ENG
4. Victor, J. (2011, May 31). ehow.com. Retrieved from http://www.ehow.com/info_8515039_cause-shareholder-losses-acquisitions.html
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