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Acquiring other corporations?

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Many corporate acquisitions result in losses to the acquiring firms' stockholders. Why do firms purchase other corporations? Are they simply paying too much for the acquired corporation? A co-worker asks your opinion.

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Many corporate acquisitions result in losses to the acquiring firms' stockholders. Why do firms purchase other corporations?

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Firms purchase other corporation either to obtain vertical integration by acquiring companies which supply raw material or inputs/resources for their products or services or to obtain horizontal integration by acquiring companies producing similar goods and services. Therefore, the purpose of acquisition is to either reduce costs, ...

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  • BCom, SGTB Khalsa College, University of Delhi
  • MBA, Rochester Institute of Technology
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