What is the term for when one business buys out another?

What is the term for when one business buys out another?

• A. Merging
• B. Franchising
• C. Acquisition
• D. Diversification

Answer: (C)

The term for when one business buys out another is "acquisition." In this context, an acquisition involves one company taking control of another, typically by purchasing a majority stake in the target company. This process allows the acquiring company to expand its operations, increase its market share, or gain access to new technologies and resources. Acquisitions can take various forms, including friendly takeovers, where both parties agree to the terms of the sale, or hostile takeovers, where the target company does not wish to be acquired. The strategic goal is often to enhance the acquiring company's competitiveness and profitability. In contrast, merging refers to the combination of two companies to form a single entity, which is different from one company simply buying another. Franchising denotes a business arrangement where one party licenses its brand and business model to another, while diversification involves a company expanding its operations into different markets or product lines, rather than acquiring another company outright. These distinctions clarify why "acquisition" is the appropriate term for a situation where one business buys out another.

The term for when one business buys out another is "acquisition." In this context, an acquisition involves one company taking control of another, typically by purchasing a majority stake in the target company. This process allows the acquiring company to expand its operations, increase its market share, or gain access to new technologies and resources.

Acquisitions can take various forms, including friendly takeovers, where both parties agree to the terms of the sale, or hostile takeovers, where the target company does not wish to be acquired. The strategic goal is often to enhance the acquiring company's competitiveness and profitability.

In contrast, merging refers to the combination of two companies to form a single entity, which is different from one company simply buying another. Franchising denotes a business arrangement where one party licenses its brand and business model to another, while diversification involves a company expanding its operations into different markets or product lines, rather than acquiring another company outright. These distinctions clarify why "acquisition" is the appropriate term for a situation where one business buys out another.