Acquisition Premium

Filed Under »
Dictionary Says

Definition of 'Acquisition Premium'

The difference between the actual cost for acquiring a target firm versus the estimate made of its value before the acquisition.
Investopedia Says

Investopedia explains 'Acquisition Premium'

During a merger and acquisition, companies will first estimate the cost that they wish to pay for a target firm. As the entire M&A process takes many weeks, the price paid for the target firm may in fact be higher or lower than its market price at the time of completion because of economic fluctuations.

Related Definitions

  • Acquisition

    A corporate action in which a company buys most, if not all, of the target company's ownership stakes in order to assume control of the target firm. Acquisitions are often made as part ...
    Read More »
  • Hostile Takeover

    The acquisition of one company (called the target company) by another (called the acquirer) that is accomplished not by coming to an agreement with the target company's management, but ...
    Read More »
  • Merger

    The combining of two or more companies, generally by offering the stockholders of one company securities in the acquiring company in exchange for the surrender of their stock.
    Read More »
    • Amalgamation

      The combination of one or more companies into a new entity. An amalgamation is distinct from a merger because neither of the combining companies survives as a legal entity. Rather, a ...
      Read More »
    • Takeover

      A corporate action where an acquiring company makes a bid for an acquiree. If the target company is publicly traded, the acquiring company will make an offer for the outstanding shares.
      Read More »
    • Target Firm

      A company which is the subject of a merger or acquisition attempt. A takeover attempt can take on many different flavors, depending on the attitude of the target firm toward the ...
      Read More »
    • Predator

      In mergers and acquisitions, a company with sufficient financial means to easily bear the risks associated with acquiring other companies. Predators are considered to be the financially ...
      Read More »
    • Friendly Takeover

      A situation in which a target company's management and board of directors agree to a merger or acquisition by another company. In a friendly takeover, a public offer of stock or cash is ...
      Read More »
    • Merger Deficit

      An accounting term used to describe the situation when the total value of the share capital used to purchase another company is less then the total value of the equity purchased. The ...
      Read More »
    • Acquirer

      1. The firm which is purchasing a company in an acquisition. The acquirer is also known as a bidder.2. A financial institution or merchant bank (a merchant acquirer) which is contacted ...
      Read More »

Articles Of Interest

Partner Links