My apologies if I misunderstood but, in your opening statement you said a larger gym was acquiring other gyms and trying to buy out your owner. You asked if it was "normal business in cheer?" and said nothing about the "fairness of other gyms crossing up and down". Later on you said your daughter was losing some friends to go to the larger gym because, "it wins more events." You asked, "what is this teaching our kids?" IMO, it is teaching our kids there are options out there, I never implied your daughter wasn't working hard. If the question is now, "Is it fair for a large gym to cross level 5 athletes to their lower divisions just to win?" At some events, "yes" at other events "no".
Cheer, IMO, is one of the most fair "sports" out there. While my kids go to a gym that puts their teams together by level and uses crossovers for injuries only, we don't concern ourselves with the others that are rumored to "stack" within the rule guidelines. We had a parent a few years back fretting over a gym she knew dropped from a level four to a level two and after months of getting parents and athletes in a tizzy, that team didn't even place in the top half. All gyms use strategy in building teams, for some, it is long term with steady progression, for others, it is short term for fast results.