Who is an Acquirer: Roles in M&A, types, responsibilities

Key Highlights

An acquirer is the company, investor, or entity that purchases a controlling stake, significant shares, or the entire business of another company during a merger, acquisition (M&A), or takeover.
Types of acquirers includes strategic and financial acquirer.

Who is an Acquirer?

An acquirer is the company, investor, or entity that purchases a controlling stake, significant shares, or the entire business of another company during a merger, acquisition (M&A), or takeover. The acquirer initiates the transaction, provides the funding, and assumes ownership responsibilities once the deal is completed.

Role of an Acquirer in M&A

Identifies and evaluates potential targets based on strategic fit, financial strength, and long-term business goals.
Conducts detailed due diligence to assess risks, operational capabilities, liabilities, and growth potential.
Negotiates deal structure and valuation, ensuring terms align with the acquirer’s strategic and financial objectives.
Arranges financing for the transaction, which may include cash, debt, equity, or a combination of instruments.
Executes post-merger integration, aligning teams, systems, and processes to realise synergies and improve performance.
Aims to enhance business value, whether by expanding market share, entering new markets, acquiring technology, or improving operational efficiency.

Types of Acquirers

1. Strategic Acquirer: Typically an operating company looking to create long-term synergies such as cost savings, new capabilities, expanded customer base, or product diversification.

2. Financial Acquirer: Usually private equity (PE) firms, investment funds, or investors focused on financial returns. They aim to acquire, improve, and eventually exit the investment profitably.

Key Responsibilities of an Acquirer

Conducting due diligence on the target company
Arranging financing (cash, debt, equity, or combination)
Structuring the transaction
Managing post-acquisition integration
Complying with legal and regulatory requirements

FAQs

1. Who can be an acquirer in a company takeover?

Any entity - such as a corporate, private equity fund, financial institution, or individual investor - can be an acquirer if they purchase a significant stake or controlling interest.

2. What is the difference between an acquirer and a target company?

The acquirer is the buying entity, while the target is the company being purchased or merged.

3. How does an acquirer finance a purchase?

Acquirers use various methods including cash reserves, debt financing, equity issuance, or a combination of these.

4. Why do strategic acquirers often pay higher premiums?

Because they expect long-term synergies - such as cost savings, revenue growth, or operational benefits that justify a higher purchase price.

5. Does an acquisition always result in full ownership?

No. Acquirers may buy a minority, significant, or controlling stake, depending on the objective and deal structure.