What is the process called when one firm purchases another?

The process when one firm purchases another is known as an acquisition. In this context, an acquisition refers specifically to the act of one company taking over another by purchasing a significant portion or all of its shares and effectively controlling the company. This process often allows the acquiring firm to leverage the resources, capabilities, and market presence of the target firm to enhance its own competitive advantage.

Understanding this term is crucial in the context of corporate strategy and finance, as acquisitions are a common approach for firms looking to grow quickly, enter new markets, or achieve economies of scale. While a merger might imply that two companies are joining forces, and consolidation might refer to a combination of businesses into a single entity, an acquisition distinctly highlights the purchasing aspect, making it more precise in this context. Furthermore, a partnership signifies a collaborative relationship between firms rather than one firm buying another, which aligns less with the definition sought in this question.