A common acquisition strategy example in the business industry

A common acquisition strategy example in the business industry

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When 2 companies undergo an acquisition, it is likely that they will do one of the following techniques

Many people think that the acquisition process steps are always the same, whatever the business is. However, this is a standard misunderstanding due to the fact that there are actually over 3 types of acquisitions in business, all of which include their own operations and strategies. As business individuals like Arvid Trolle would likely confirm, among the most frequently-seen acquisition strategies is called a vertical acquisition. Essentially, this acquisition is the polar opposite of a horizontal acquisition; it is where one firm acquires another business that is in an entirely different position on the supply chain. As an example, the acquirer company might be higher up on the supply chain but opt to acquire a firm that is involved in a key part of their business functions. In general, the beauty of vertical acquisitions is that they can generate new revenue streams for the businesses, as well as decrease costs of manufacturing and streamline operations.

Amongst the several types of acquisition strategies, there are 2 that people usually tend to confuse with each other, perhaps because of the similar-sounding names. These are known as 'conglomerate' and 'congeneric' acquisitions, which are two really separate strategies. To put it simply, a conglomerate acquisition is when the acquirer and the target company are in entirely unrelated markets or engaged in different activities. There have actually been many successful acquisition examples in business that have involved 2 starkly different companies with no overlapping operations. Normally, the aim of this strategy is diversification. As an example, in a scenario where one services or product is struggling in the current market, businesses that also possess a diverse range of other product or services tend to be much more steady. On the other hand, a congeneric acquisition is when the acquiring firm and the acquired company belong to a comparable industry and sell to the same kind of client but have relatively different services or products. Among the major reasons why companies may opt to do this type of acquisition is to simply increase its line of product, as business people like Marc Rowan would likely confirm.

Prior to diving into the ins and outs of acquisition strategies, the very first thing to do is have a solid understanding on what an acquisition truly is. Not to be mixed-up with a merger, an acquisition is when one company purchases either the majority, or all of another business's shares to gain control of that business. Generally-speaking, there are approximately 3 types of acquisitions that are most popular in the business world, as business people like Robert F. Smith would likely understand. Among the most prevalent types of acquisition strategies in business is called a horizontal acquisition. So, what does this mean? Essentially, a horizontal acquisition involves one company acquiring an additional firm that is in the very same market and is performing at a comparable level. The two companies are essentially part of the exact same market and are on a level playing field, whether that's in production, finance and business, or agriculture etc. Typically, they could even be considered 'rivals' with one another. In general, the primary benefit of a horizontal acquisition is the increased possibility of increasing a company's client base and market share, in addition to opening-up the possibility to help a company broaden its reach into new markets.