Page 195 - CFF

M&A (continued)

– Acquisition

– Refers to gaining possession or control over a target company or
its assets, and can be accomplished in two ways:

– An asset purchase

– A stock purchase

• Due diligence

– The period in the lead-up to an M&A transaction. It is conducted to
assess the risks associated with the potential transaction. The premise
behind the due diligence is that the acquiring company has the
opportunity to gather the necessary information to assess the target
company’s historical performance and potential future earnings.

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