Purchase Acquisition


DEFINITION of 'Purchase Acquisition'

An accounting method used in mergers and acquisitions with which the purchasing company treats the target firm as an investment, adding the target's assets to its own fair market value.

BREAKING DOWN 'Purchase Acquisition'

If the amount paid for a company is greater than fair market value, the difference is reflected as goodwill. Because goodwill must be written-off against future earnings, this makes the pooling-of-interests method preferable.

  1. Acquisition

    A corporate action in which a company buys most, if not all, ...
  2. Goodwill

    An account that can be found in the assets portion of a company's ...
  3. Acquisition Adjustment

    The difference between the price an acquiring company pays to ...
  4. Upstairs Deal

    A business agreement that is made by upper management, and is ...
  5. Fair Value

    1. The estimated value of all assets and liabilities of an acquired ...
  6. Merger

    The combining of two or more companies, generally by offering ...
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