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What does acquirer mean in business and contracts?
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In this article, I will break down the meaning of acquirer so you know all there is to know about it!
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Table of Contents
What Is An Acquirer
In business, the term acquirer can have different meanings.
Generally speaking, the term acquirer refers to a person or entity that purchases or acquires certain rights, either tangible or intangible.
For example, in mergers and acquisitions, an acquirer is the company that purchases another company called the target.
In electronic payments, a merchant acquirer refers to a merchant acquiring rights to process electronic payments for its customers.
Keep reading as I will provide you with more specifics on different types of acquirers so you’ll know what it means depending on the context.
But first, let’s provide a general definition of the term acquirer.
How do you define acquirer?
To better understand the meaning of acquirer, let’s first define it in plain English.
According to The Free Dictionary by Farlex, an acquirer is defined as:
“To gain possession of” or “to gain through experience”
As you can see from this definition, the term acquirer generally refers to “gaining” something whether it’s an asset, knowledge, rights, experience, or other.
In business, the term acquirer will have a somewhat similar definition.
According to the Cambridge Dictionary, an acquirer is:
A company that buys other companies, usually to sell them for a profit
In essence, the most common definition of acquirer in business is to refer to an individual or company purchasing another company, asset, or rights.
Types of Acquirers
What are the different types of acquirers in business?
Acquirer In Contracts
In the context of a contract, an acquirer could be an individual or entity who is acquiring certain rights as outlined in the contract.
For example, if a contracting party is acquiring the rights on a real estate property, then the acquirer is the party who will become the titleholder after the transaction has closed.
If there is an acquirer in a contract, there must be a corresponding seller.
In other words, for a person or entity to acquire rights, another party must relinquish the rights in favor of the acquirer.
Acquirer In M&A
In mergers and acquisitions, the acquirer is a company that is looking to purchase the assets or shares of another company in the context of an acquisition.
Corporate acquisition is a process where one company takes over the control, management, and operations of another company.
Public companies and private companies can acquire other entities to solidify their position in the market, access specific knowledge and expertise, penetrate new markets, take advantage of synergies, and for other reasons.
Acquirer In Payment Processing
In payment processing, a merchant acquirer refers to a party who enters into an agreement with a financial institution allowing it to process electronic payments.
In other words, the merchant acquirer will be able to use the financial institution’s systems to process electronic payments and receive money from its clients.
Acquirer in payments and payment processing is defined as:
A merchant acquirer or a gaining bank is an institution that enables a merchant to accept payments through a POS device or online methods by offering them a reliable merchant account into which funds from customers are ultimately settled
The financial institution will provide payment processing services to individuals and companies allowing them to electronically charge their clients and receive the payment directly in their merchant account.
The bank or financial institution will validate every transaction to ensure it is legitimate, will charge a transaction fee, and will send the payment to the merchant.
Acquirer in Accounting
In accounting, an acquirer is an entity that obtains the control of a reporting entity.
Accounts and accounting professionals have an important judgment call to make when dealing with merger transactions.
It’s important to determine if there is an acquirer so that they apply the proper acquisition accounting to the transaction.
This is what PwC says on determining the accounting acquirer:
In a SPAC merger transaction, an important accounting judgment is the determination of which entity is the accounting acquirer. The accounting acquirer is the entity that obtains control of the reporting entity and may be different from the legal acquirer. If the transaction is between entities under common control (for example, the same entity or individual controls the target company and the combined entity after the transaction), acquisition accounting would not apply
Acquirer vs Acquiror
Let’s look at the difference in how the terms acquirer and acquiror are defined.
According to the Cambridge Dictionary, acquiror is defined as:
“Buyer” or “purchaser”
In other words, an acquiror is a person or entity buying something or certain rights.
Moving on, according to the Merriam-Webster dictionary, an acquirer is defined as:
“One that acquires” or “a company that acquires another company”
As you can see, both terms have the same meaning in substance.
Acquirer Meaning Takeaways
So there you have it folks!
What Is Acquirer
In a nutshell, an acquirer refers to a person or company purchasing rights, whether a portion or all, in something else such as another company, a physical asset, a movable property, intangible rights, or others.
In business, the most common use of the term “acquirer” is to refer to companies buying rights in other companies in the context of mergers and acquisitions.
Typically, a company (the acquirer) will purchase a majority stake in another company (the target) by purchasing the target’s stock voting rights.
Another common meaning of acquirer is to refer to merchant acquirers who partner up with a bank or financial institution to get payment processing services allowing their clients to process electronic payments.
The acquirer will therefore be the financial institution that acquires the rights to provide payment processing services to the merchant by managing the merchant’s bank account.
Now that you know what acquirer means in business, good luck with your transaction!
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If you enjoyed this article on Acquirer Meaning, I recommend you look into the following terms and concepts. Enjoy!
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