Why would they get acquired? They were doing good work in-between the partying?

The sad thing about this is that if you are doing this real goal driven it might be your main source of income.

You spend your company's money on private immoral fun of customers, customers spend their company's money on your products/services instead of the otherwise not so different competition. The key part is that nobody actually invests their private money, but the value they get out of it is private. That's why it works and that's why it's usually illegal, and like most illegal things it happens anyway until someone at the top gets really pissed with you/your department/your company specifically.

I wonder how much things would.change were all of this legal. I mean, booze and stripping is already legal; consider also legal prostitution and cocaine.

Is this just having physiological fun together, or having an evidence of illegal conduct for each other, potentially usable as a weapon?

They 24X'd revenue in 12 months.

Whatever they did produced results.

Any profit or income?

It's like that famous saying: "People who attend coke fueled orgies together, do multi-million dollar deals together".

Partying with the right people?

People buy from people they like, I guess? I'm not in sales but it's a lot easier to bond with someone while having dinner together and drinks, than it is in an office meeting room.

This appears to be extremely common, especially in some fields, such as advertising. In one of my former companies (in the UK) the sales people (whom I've usually seen either with heavy hangover or outright drunk/drugged) called this 'drugs and hookers -driven sales' (or something aong these lines), and were extremely successful in getting the new contracts signed.