WebXam Business Foundations Practice Test 2026 - Free Practice Questions and Study Guide

The purchase of one company by another company is referred to as an acquisition. In this context, an acquisition involves one company taking over another company, either by purchasing a majority stake or all of its shares. This process allows the acquiring company to expand its operations, gain market share, or achieve synergies that can enhance overall efficiency and profitability.

Mergers typically involve two companies coming together to form a new entity, rather than one company outright purchasing another. Investment generally refers to the act of putting money into a business with the expectation of generating profits, but it does not specifically denote the purchase of a company. A subsidiary is a company that is controlled by another company, usually through ownership of more than half of its stock; it represents a relationship after an acquisition has taken place, rather than the action of buying. Therefore, acquisition accurately captures the concept of one company purchasing another.