An internal stakeholder acquisitions is an individual or party that is part of the organization, such as, but not limited to, the employees, owners, Board of Directors, Managers, Investors, etc. of a company. On the other hand, external stakeholder acquisitions are typically parties or groups that are not part of the organization, but are nevertheless affected by its activities, such as suppliers, customers, creditors, clients, competitors, government, etc.
Accordingly, an internal stakeholder acquisitions is a corporate action by one or more of the internal stakeholders to obtain majority ownership and control of the company. An internal stakeholder acquisitions can occur upon the exiting of one or more of the company’s owners enabling the remaining stakeholders to acquire the exiting owners interest. In a closely-held company, an internal acquisition may be controlled by a well drafted shareholder, buy-sell, or voting agreement among the existing owners.
An external stakeholder acquisition is an action in which another company or an outside stakeholder buys, or otherwise acquires, most, if not all, of another firm’s ownership stakes to assume control of that company. An acquisition occurs when a buying company obtains more than 50% ownership in a target company, which then allows the acquiring company to make decisions regarding the newly acquired assets without the approval of the target company’s owners. Typically, such an action is part of the acquiring company’s growth strategy when it is more beneficial to take over an existing company’s operations that it is to expand on its own.
While an acquisition by one company of another may be “hostile,” an acquisition can also be beneficial for both the acquiring and the target company, as it may allow the companies to achieve greater economies of scale, greater market share, increased synergy, cost reduction, or a new nice of offerings in the market. Moreover, an acquisition may lead to higher growth and profits and may reduce excess capacity and eliminate competition.
For more information on acquisitions, please contact Antonoplos & Associates at 202-803-5676 or on the web at www.Antonlegal.com.