What term is used when one business buys another business outright (purchasing another firm)?

What term is used when one business buys another business outright (purchasing another firm)?

• A. Mergers
• B. Takeover / Acquisition
• C. External Growth
• D. Stock

Answer: (B)

Taking over another business by buying it outright is called a takeover, or acquisition. This happens when the buying company purchases a controlling stake in the target firm—often more than half the shares—giving it control of the other business. This is different from a merger, where two firms join on roughly equal terms to form a new entity. External growth is a broader idea about growing from outside the business and can include takeovers, but it isn’t the specific term for buying another company. Stock refers to the shares themselves, not the action of purchasing the company. So the term that best fits the described action is takeover (acquisition).

Taking over another business by buying it outright is called a takeover, or acquisition. This happens when the buying company purchases a controlling stake in the target firm—often more than half the shares—giving it control of the other business. This is different from a merger, where two firms join on roughly equal terms to form a new entity. External growth is a broader idea about growing from outside the business and can include takeovers, but it isn’t the specific term for buying another company. Stock refers to the shares themselves, not the action of purchasing the company. So the term that best fits the described action is takeover (acquisition).