Page 70 - DLIS104_MANAGEMENT OF LIBRARIES AND INFORMATION CENTRES

Unit 10: Periodical Section

5. Indexing Notes
6. Resource Service
7. Searching
8. Information Assistance
9. Instructional Service such as Hands-on Demonstration; Library Tours.
10. Library Exhibits
11. Library Publication: Guide
12. Photocopy for TOC free of charge
13. Selection of Periodical Transcription/Researches.

Acquisition

An acquisition is the purchase of one business or company by another company or other business
entity. Consolidation occurs when two companies combine together to form a new enterprise
altogether, and neither of the previous companies survives independently. Acquisitions are divided
into “private” and “public” acquisitions, depending on whether the acquire or merging company
is or is not listed on public stock markets. An additional dimension or categorization consists of
whether an acquisition is friendly or hostile. Achieving acquisition success has proven to be very
difficult, while various studies have shown that 50% of acquisitions were unsuccessful.

Caution The acquisition process is very complex, with many dimensions influencing its
outcome.
Whether a purchase is perceived as being a “friendly” one or a “hostile” depends significantly on
how the proposed acquisition is communicated to and perceived by the target company’s board of
directors, employees and shareholders. It is normal for M&A deal communications to take place in
a so-called ‘confidentiality bubble’ wherein the flow of information is restricted pursuant to
confidentiality agreements. In the case of a friendly transaction, the companies cooperate in
negotiations; in the case of a hostile deal, the board and/or management of the target is unwilling
to be bought or the target’s board has no prior knowledge of the offer. Hostile acquisitions can,
and often do, ultimately become “friendly”, as the acquirer secures endorsement of the transaction
from the board of the acquire company. This usually requires an improvement in the terms of the
offer and/or through negotiation.

Did u know? “Acquisition” usually refers to a purchase of a smaller firm by a larger one.
Sometimes, however, a smaller firm will acquire management control of a larger and/or longer-
established company and retain the name of the latter for the post-acquisition combined entity.
This is known as a reverse takeover. Another type of acquisition is the reverse merger, a form of
transaction that enables a private company to be publicly listed in a relatively short time frame. A
reverse merger occurs when a privately held company buys a publicly listed shell company,
usually one with no business and limited assets.
The buyer buys the shares, and therefore control, of the target company being purchased.
Ownership control of the company in turn conveys effective control over the assets of the
company, but since the company is acquired intact as a going concern, this form of transac-
tion carries with it all of the liabilities accrued by that business over its past and all of the
risks that company faces in its commercial environment.
The buyer buys the assets of the target company. The cash the target receives from the sell-
off is paid back to its shareholders by dividend or through liquidation. This type of trans-
action leaves the target company as an empty shell, if the buyer buys out the entire assets.
A buyer often structures the transaction as an asset purchase to “cherry-pick” the assets that
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