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Horizontal acquisition

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Definition of Horizontal acquisition

Horizontal Acquisition Image 1

Horizontal acquisition

Merger between two companies producing similar goods or services.



Related Terms:

acquisition

Takeover of a firm by purchase of that firm’s common
stock or assets.


Acquisition of assets

A merger or consolidation in which an acquirer purchases the selling firm's assets.


Acquisition of stock

A merger or consolidation in which an acquirer purchases the acquiree's stock.


Company Acquisitions

Assets acquired to create money. May include plant, machinery and equipment, shares of another company etc.


Corporate acquisition

The acquisition of one firm by anther firm.



Creative Acquisition Accounting

The allocation to expense of a greater portion of the price
paid for another company in an acquisition in an effort to reduce acquisition-year earnings and
boost future-year earnings. acquisition-year expense charges include purchased in-process research
and development and an overly aggressive accrual of costs required to effect the acquisition.


Horizontal analysis

The process of dividing each expense item of a given year by the same expense item in
the base year. This allows for the exploration of changes in the relative importance of expense items over time
and the behavior of expense items as sales change.


Horizontal Acquisition Image 2

Horizontal merger

A merger involving two or more firms in the same industry that are both at the same
stage in the production cycle; that is two or more competitors.


Horizontal spread

The simultaneous purchase and sale of two options that differ only in their exercise date.


Policy Acquisition Costs

Costs incurred by insurance companies in signing new policies, including expenditures on commissions and other selling expenses, promotion expenses, premium
taxes, and certain underwriting expenses. Refer also to customer, member, or subscriber
acquisition costs.


Tax free acquisition

A merger or consolidation in which 1) the acquirer's tax basis in each asset whose
ownership is transferred in the transaction is generally the same as the acquiree's, and 2) each seller who
receives only stock does not have to pay any tax on the gain he realizes until the shares are sold.


Taxable acquisition

A merger or consolidation that is not a tax-fee acquisition. The selling shareholders are
treated as having sold their shares.


Vertical acquisition

acquisition in which the acquired firm and the acquiring firm are at different steps in the
production process.



 

 

 

 

 

 

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