Acquisition Financing

What is 'Acquisition Financing'

Acquisition financing is the capital that is obtained for the purpose of buying another business. Acquisition financing allows the user to meet their current acquisition aspirations by providing immediate resources that can be applied toward the transaction.

BREAKING DOWN 'Acquisition Financing'

There are several different choices for a company that is looking for acquisition financing. A line of credit or a traditional loan are the most common choices. Favorable rates for acquisition financing can help smaller companies reach economies of scale and is generally viewed as an effective method for increasing the size of the company's operations.

RELATED TERMS
  1. Horizontal Acquisition

    The acquisition of one company by another in the same industry. ...
  2. Dilutive Acquisition

    A takeover transaction that will decrease the acquirer's earnings ...
  3. Acquisition Premium

    The difference between the estimated real value of a company ...
  4. Drop Dead Fee

    Fee paid by a borrower to a lender when an acquisition deal falls ...
  5. Acquisition

    A corporate action in which a company buys most, if not all, ...
  6. Acquisition Fee

    A fee charged by a lessor to cover the expenses incurred in arranging ...
Related Articles
  1. Markets

    What's an Acquisition?

    In corporate terms, an acquisition is the purchase of a company or the division of a company. Some acquisitions are paid in cash, while others are paid with a combination of cash and the acquiring ...
  2. Financial Advisor

    Top Tips for Buying a Financial Advisory Practice

    When acquiring a new financial advisory practice, make sure that your game plan avoids these acquisition missteps.
  3. Markets

    Is Equity Financing the Right Choice for Your Business?

    Discover the benefits and drawbacks of equity financing for a small business, and learn when equity financing should be used instead of debt financing.
  4. Managing Wealth

    Mezzanine Financing

    Learn about this alternative method of financing companies use to finance expansion.
  5. Managing Wealth

    4 Ways Millennials Can Buy Private Businesses

    Buying private businesses is a good way to have greater control over your investments while increasing your income and avoiding the fluctuations of the market.
  6. Managing Wealth

    Why Successful Business Owners Sell Out

    Learn the motives that drive companies into the arms of an acquirer.
  7. Investing

    What is Debt Financing?

    When a company needs to pay for something, it can pay with cash, or it may finance the purchase. Financing means that it gets the money from other businesses or sources, in return for obligations. ...
  8. Investing

    Mergers Put Money In Shareholders' Pockets

    Learn the five ways mergers and acquisitions can increase a company's value.
  9. Investing

    Mergers and Acquisitions: Conclusion

    One size doesn't fit all. Many companies find that the best way to get ahead is to expand ownership boundaries through mergers and acquisitions. For others, separating the public ownership of ...
  10. Investing

    Buy This M&A Machine Before The Market Catches On

    Rock-bottom interest rates and huge cash stockpiles have led to a rebirth in the market for mergers and acquisitions (M&A) over the past few years. Faced with a weak economic recovery and a lack ...
RELATED FAQS
  1. What are some ways of financing an acquisition?

    Learn about how business acquisitions are financed, from using private equity funds to receiving huge acquisition loans from ... Read Answer >>
  2. How do I evaluate whether a company is a good acquisition candidate?

    Evaluate whether a company is a good acquisition candidate by analyzing its price, debt load, litigation and financial statements. Read Answer >>
  3. What is the difference between a merger and an acquisition?

    Read about the legal and practical differences between a corporate merger and corporate acquisition, two terms often used ... Read Answer >>
  4. Why are the terms 'merger' and 'acquisition' always used together if they describe ...

    Learn about mergers and acquisitions and how these two corporate actions differ based on the size and participation of the ... Read Answer >>
  5. What responsibilities does a company take on after an acquisition?

    Read about some of the most important responsibilities assumed by new company management after a successful acquisition has ... Read Answer >>
  6. Why would a company want to do an acquisition of another company?

    Review some of the reasons why business acquisitions take place, and how the acquiring company is looking to benefit from ... Read Answer >>
Hot Definitions
  1. Poison Pill

    A strategy used by corporations to discourage hostile takeovers. With a poison pill, the target company attempts to make ...
  2. Glass-Steagall Act

    An act the U.S. Congress passed in 1933 as the Banking Act, which prohibited commercial banks from participating in the investment ...
  3. Quantitative Trading

    Trading strategies based on quantitative analysis which rely on mathematical computations and number crunching to identify ...
  4. Bond Ladder

    A portfolio of fixed-income securities in which each security has a significantly different maturity date. The purpose of ...
  5. Duration

    A measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates. ...
  6. Dove

    An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that ...
Trading Center