Final answer:
An acquisition is when one company purchases another by buying its stock, making the buyer the shareholders of the acquired company. Shareholders hold a portion of ownership through shares and have influence in corporate governance via voting for the board of directors.
Step-by-step explanation:
The purchase of one company by another, usually by buying its stock, is a acquisition. When individuals or entities buy stock, they become the owners or shareholders of the firm. Stock represents ownership of a firm, divided into shares, signifying a portion of the overall ownership of the company. Large public companies like IBM, AT&T, and others have millions of shares, which are bought and sold by investors. During a transaction where stock is bought from an existing shareholder, the company itself does not receive a financial return from this sale.
A corporate merger is when two separate firms combine into one, whereas an acquisition specifically refers to one company purchasing another. The acquired company may still operate under its former name, but it shares common ownership with the acquiring firm. The nature of public companies allows shareholders to have a say in corporate governance through their votes for the board of directors, with the number of votes determined by the number of shares they hold.