How an Acquirer Work

In a corporate system, an acquirer may decide to purchase all or a portion of another company's stock to obtain ownership of the business. When the acquirer takes over half of the voting shares in its target company, it automatically takes over that business's affairs. Companies may do this to gain greater control over the board of directors' decisions or expand their company with other business resources.

Corporations may adopt different bargain methods, and the type of deal in place will affect acquirer relationships. Some contracts may allow the acquirer to pay for the rights to control the company and incorporate it into their current operations. Acquirers can do purchasing deals in the form of a cash purchase, a stock purchase, a stock exchange, or a combination of the three. Usually, both companies amicably agree upon a deal, but an acquisition could be one-sided in some cases.

The acquiring institution could partner with a merchant to complete electronic payment transactions and deposit processes in the financial sector. The agreement usually enables the acquiring institutions to accept debit and credit card payments for merchants, which means acquirees can issue out merchant accounts to companies who choose to accept debit and credit cards. The acquiree becomes responsible for ensuring that only legitimate and financially sound businesses get merchant accounts.

Example of an Acquirer

Let's consider the Raven shoe brand, for example. Now you own Raven shoes, and you are looking to purchase and increase market share, probably to expand to a new market and make more sales. You then find a smaller company with an easily recognizable brand in the new market and great resources that your brand can benefit from. After agreeing with your target company, you buy some or the majority of their shares and use their resources. In this case, you are an acquirer, and from here, you can decide to buy the whole company or consider a merger with them and work in a partnership.

Here's an example in the finance sector. Let's assume you own a bank called Yellow Bank, and some customers in your bank own businesses which would do better with electronic payment option. You decide to make your bank a licensed member of a card processor such as Visa or Mastercard, and when you sign up with a merchant bank to make it possible for those customers to accept electronic payments in their stores. In essence, you now serve as a middle man who authorizes client credit card purchases and links the merchant with them. Here, you have acquired a right to offer card services, thus becoming an acquirer in the financial sector.

In either industry, you can leverage others' input to make more profit and build your business as an acquirer.