The term "target companies" refers to businesses that are being considered for acquisition, merger or takeover by another company. In other words, it is a company that has been identified as a potential candidate for purchase or integration into an existing organization. Target companies can be chosen based on various factors such as their market position, financial performance, product offerings, and growth potential. The acquiring company typically conducts extensive due diligence to evaluate the target's strengths and weakness before making a final decision about whether to proceed with the acquisition or not.