Company Acquisition

Last Updated July 9, 2026

Introduction

A company may acquire another company in an "acquisition" ("company acquisition"). When the company ("acquiring company") acquires the other company ("acquiree", "target company"), the other company becomes an acquired company and subsidiary of the acquiring company, and the acquiring company becomes the parent company of the acquired company.

Requirements

The acquiring company and the target company must meet the following requirements for the acquisition to be successful.

1. The board of directors (or officers if there is no board of directors) of the acquiring company should reach a consensus on whether to proceed with the acquisition.
2. The board of directors (or officers if there is no board of directors) of the target company should reach a consensus on whether to proceed with the acquisition.
3. The acquiring company and the target company should agree to the terms of the acquisition.
4. The acquiring company should purchase with money 100% of the shares of the target company at the target company's share price.

Terms of the Acquisition

The acquiring company and target company both create the "terms of the acquisition", a document that defines the legal, financial, and structural conditions of the acquisition. The acquiring company and the target company may both update the terms of the acquisition until both the acquiring company and the target company agree to the terms of the acquisition.

Share Price

The share price of a company is calculated as the company's market capitalization divided by the number of the company's shares.

Market Capitalization

A company's market capitalization is calculated as the monetary value of the company's assets minus the monetary value of the company's liabilities.

Retroactive Purchase of Shares

A parent company that has not purchased 100% of the shares of an acquired company should retroactively purchase the remamining shares of the acquired company at the current share price of the acquired company.

Governing Law Clause

This document is governed by the Law of CLOUT.