Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. You could sustain a loss of some or all of your initial investment and should not invest money that you cannot afford to lose. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.

Acquisition definition

When one company decides to take over another one, it is referred to as an acquisition. The acquiring company will do this by purchasing either the majority or entirety of the ownership stake of the company being taken over.

There are two types of acquisition: hostile and friendly. A hostile takeover is the term for when a company is bought by another without its consent, usually when the buying company purchases a majority amount of its equities to get a controlling stake. When both companies agree to the terms of the acquisition, it is referred to as a friendly takeover.

Acquisitions are usually made as part of a company’s growth strategy, with the targeted company having something that the buying company wants but either cannot or does not wish to develop internally. They are mostly made in exchange for cash, stock in the buying company, or a mixture of the two.

Mergers and acquisitions

When both companies see synergy in combining forces but wish to come together as equals, it is referred to as a merger. Traders will often refer to both under the same umbrella term: mergers and acquisitions, or M&A for short.

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