What does it mean for a company to buy another company? Does it mean they have the power to do whatever they want with it? If so, what’s the limit?

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What does it mean for a company to buy another company? Does it mean they have the power to do whatever they want with it? If so, what’s the limit?

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There is no limit, as far as closing the purchased company down to eliminate the competition.

the limit is what the government allows (there’s usually some sort of anti-trust law that could be applied when the companies involved are big enough to prevent monopolies).

when a company buys another company then what happens is that they pay the owners of the company they’re taking over an amount the majority of the owners find acceptable.

when they’re both publicly traded it’s usually done by exchanging shares in the old company for ones in the new company (the one taking over).

and when they own it they can do with the company whatever they want (within the law), so basically anything the company could do previously.

The conditions of the purchase are detailed in the acquisition contract. Any real limitation to what can be negotiated depends on local laws and regulations.