What term means the buying of one company by another?

• A. Merger
• B. Acquisition
• C. Takeover
• D. Purchase

Answer: (B)

The concept being tested is how one company gains ownership and control by buying another. An acquisition specifically refers to one company purchasing a majority stake or all of another company and taking control of its operations. This is the precise term used to describe the act of buying and taking over another business, whether the target continues as a subsidiary or is folded into the acquirer.

A merger, by contrast, implies a coming together of two firms to form a new or combined entity, rather than one company simply purchasing another. A takeover often describes the method of gaining control, sometimes in a hostile context, but the fundamental act remains a purchase and assumption of control. A purchase is a general term for buying, and it doesn’t by itself convey the element of acquiring control within a corporate structure.