Ways in which it can happen:
It is important to note that due to horizontal gene transfer, the early days of life, and still bacteria to this day due to bacterial conjugation, are actually a graph and not a tree, see also: Figure "Graph of life".
Definitely have a look at: coral of life representations.
Current Wikipedia seems to say that this refers specifically to cells taking up DNA from other dead cells as in the Avery-MacLeod-McCarty experiment, excluding other types of horizontal gene transfer like bacterial conjugation
The term is sometimes just used a synonym for horizontal gene transfer in general it seems however.