Target Company 

A Target Company refers to a firm that is the subject of an acquisition attempt by another entity, known as the acquirer.  

Key Aspects: 

• Strategic Fit: The acquirer identifies the target company as a strategic addition to its operations, aiming to enhance market share, diversify products or services, or achieve synergies. 

• Valuation: Determining the value of the target company is crucial. Methods include discounted cash flow analysis, comparable company analysis, and precedent transactions. 

• Due Diligence: A thorough investigation into the target's financials, operations, legal matters, and market position is conducted to assess risks and benefits. 

• Negotiation: Terms of the acquisition, including price, structure (cash, stock, or a combination), and post-acquisition plans, are negotiated between the parties. 

• Regulatory Approval: Depending on the size and nature of the deal, regulatory bodies may need to approve the acquisition to prevent anti-competitive practices.