Acquirer – Definition, Meaning, and Types

Definition: Acquirer is a company that makes smart acquisitions and then applies financial vision to help the business grow.

Examples of the acquirer in a Sentence

  • The acquirer held the final approval for closing.
  • Look at the customer experience it would be like to do business with your company from the point of view of an acquirer.

What Is an Acquirer?

An acquirer can be defined as a business entity that acquires a controlling interest in another enterprise, usually for cash in a debt transaction. Acquirers typically acquire control over a specific line of business or a comprehensive portfolio of assets in the infrastructure business.

An acquirer can be an entity separate from the company you purchase the rights from or part of the same group. Acquirers can also be non-profit organizations, partnerships (sometimes referred to as co-developers ), and even individuals who wish to gain access to or control a company.

Understanding an Acquirer

In business, an acquisition refers to purchasing all or part of one company by another, often known as the acquirer. The two most common reasons a company wants to acquire another that it feels can enhance its product line, or an internal restructuring occurs.

An acquirer relationship can be defined as a business-to-business relationship where a corporation purchases another company, either partially or completely. Business purchasers can acquire a firm or business in many different ways.

An acquisition is generally built on partnership but can be hostile. In this case, the acquirer creates a poison pill to avoid being acquired and keeps the target company from harm.

The acquirer must follow specific rules when taking ownership of your assets and liquidating them on your behalf. The acquiring company has its management team, usually made up of professionals with years of experience.

Acquirers usually take a controlling interest in a target, either acquiring it outright or through an asset sale. The target company usually becomes the acquirer’s subsidiary, with its assets and operations transferred to the acquiring company. 

The acquiring company becomes the new legal owner of the underlying properties, equipment, inventory, and equity interests in the target company. At this point, the acquirer takes control of the target’s operations as if they were their own.

Types of Acquirers

1. Corporate Acquirer

Corporate acquirers are typically made because a company is going out of business or a competitor wants to buy a business. This type of acquisition is an all-or-nothing business transaction. To acquire the company, you have to provide them with a specific price and certain terms.

They can often offer you a percentage of the business, or they can purchase the whole company and operate it themselves. This type of takeover is often not disclosed until after you have already signed your contract with the seller.

Corporate acquirers work with management teams, suppliers, and vendors in setting up a new operation. At its heart, an acquirer is a large, focused company focused on growing its sales and profits by acquiring other businesses.

The primary purpose of a corporate acquirer is to raise the value of the company already owned. This means that at the time of the acquisition, the acquirer does not substantially change the basic structure of the business but focuses on integration and adding value through improvements in cost structure, personnel, technologies, and the like.

2. Merchant Acquirer

A merchant acquirer is a third-party provider of payment processing services for merchants. Any company or individual can form a merchant acquirer-on-demand contract with a payment network to provide other services (e.g., data processing or information services). Still, the significant providers of merchant acquirers are Visa, Mastercard, Discover, and JCB.

There can be several different kinds of merchant acquirers, depending on whether they specialize in funding small, medium, and large-sized businesses and provide different levels of compliance services. While some fulfill purely transactional roles, others may also provide other services such as bank administration support or risk management services.

Merchant acquirers work with the acquirer’s primary financial institution (generally a bank). The primary financial institution will work with a merchant to find the best payment processor for the acquisition. The acquirer may contract with several processors depending on the transaction and budget requested by the acquirer.

For example, the Bank of Baroda operates as a merchant acquirer for retailers across the country. The bank obtains funds from commercial banks for financing purchases of goods and services from Indian merchants.

Key Takeaways

  • An acquirer can be defined as a business entity that acquires a controlling interest in another enterprise, usually for cash in a debt transaction. 
  • Acquirers typically acquire control over a specific line of business or a comprehensive portfolio of assets in the infrastructure business.
  • Corporate acquires are typically made because a company is going out of business or a competitor wants to buy a business.
  • A merchant acquirer is a third-party provider of payment processing services for merchants.