Acquisition

In plain English

An acquisition is one business buying another. In most founder led agency transactions, that means a larger agency, a group or an investor backed platform buying all or most of the shares in the founder's company, in exchange for cash, deferred or contingent payments, shares in the buyer, or a mix.

Legally, there are two routes. In a share sale the buyer acquires the company itself, with everything it owns and owes. In an asset sale the buyer acquires chosen assets and liabilities and leaves the company behind. Most agency transactions are share sales.

Why it matters to founders

For a founder, an acquisition is usually the main route to realising the value of the business. The questions that follow are about value, structure, the buyer's plans and the founder's own future role, which are covered on the sell your agency page and in the guide to choosing the right buyer.

Why it matters to buyers

For a buyer, an acquisition is a way to add capability, clients, people or scale faster than building them. It is also expensive and hard to undo, which is why criteria, assessment and integration planning matter as much as the deal itself. See buy an agency and planning an acquisition.

What to watch for

• The headline price and the amount shareholders receive are different things. See enterprise value and equity value.
• How and when the price is paid is as negotiable as the price itself. See understanding deal structure.
• Terms are usually agreed in principle in heads of terms, followed by due diligence and a binding sale agreement.

Transaction language and legal treatment depend on the agreement and the jurisdiction. Written by Motion Advisory Partners as general guidance, not legal advice.