Definition

Acquisitions of existing operations

Firms frequently acquire other firms in foreign countries as a means of penetrating foreign markets. For example, American Express recently acquired offices in London, while Procter & Gamble purchased a bleach company in Panama. An acquisition occurs when one company buys another. Acquisitions allow firms to have full control over their foreign business and to quickly obtain a large portion of foreign market share. An acquisitions of an existing corporation is subject to the risk of large losses, however, because of the large investment. In addition, if the foreign operation perform poorly, it may be difficult to sell the operations at a reasonable price.

Share it:  Cite

More from this Section

  • Acceleration clause
    Acceleration clause is a contract stating that the unpaid balance becomes due and payable ...
  • Unexploited profit opportunity
    Unexploited profit opportunity is a situation I which an investor can earn a higher than ...
  • Secondary capital
    Secondary capital is the sum of all forms of temporary capital for a bank, including limited-life ...
  • Commercial Credit Risk
    Commercial Credit Risk is the risk of loss from providing credit to corporate counter-parties. ...
  • Leveraged buyout
    Leveraged buyout is a financial strategy in which a group of investors gain voting control ...