Stock acquisition refers to a stock acquisition mode in which the company does not use cash as the medium to complete the acquisition of the target company, but the acquirer replaces the stock of the target company with newly issued stocks.
Stock acquisition is a capital contribution method in which the merging company replaces the stock or assets of the target company with newly issued stocks. The main types are mergers by absorption and mergers by new establishments, mergers with mutual shareholding and stock-for-asset mergers. The stock acquisition does not incur any tax expenses in the M&A activity, but it will affect the future tax burden of the enterprise.
The main feature that distinguishes stock acquisition from cash acquisition is that the buyer does not need to pay a large amount of cash, so it will not affect the cash position of the merging company. After the acquisition is completed, the shareholders of the target company will not lose their ownership interests. This ownership is then transferred from the target company to the merging company, making them new shareholders in the enlarged company. That is, when the acquisition transaction is completed, the target company is included in the merging company, and the merging company expands its scale. And the shareholders of the enlarged company are composed of the original shareholders and the shareholders of the target company, but the original shareholders of the merged company should take the dominant position in terms of operational control.
Are stock mergers and acquisitions good?
is good. Mergers and acquisitions is a very common form of corporate asset change. Many companies have obtained a substantial increase in assets through mergers and acquisitions. Mergers and acquisitions are often beneficial to the acquired company, because usually after the completion of the reorganization, the asset quality of the acquired company will deteriorate. be improved.