When two businesses go through an acquisition, it is most likely that they will do one of the following strategies
Before diving into the ins and outs of acquisition strategies, the 1st 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 business purchases either the majority, or all of another business's shares to gain control of that company. Generally-speaking, there are around 3 types of acquisitions that are most common in the business sector, as business individuals like Robert F. Smith would likely understand. One of the most typical types of acquisition strategies in business is known as a horizontal acquisition. So, what does this suggest? Basically, a horizontal acquisition entails one company acquiring an additional company that is in the very same market and is performing at a comparable level. The two companies are basically part of the very same market and are on an equal playing field, whether that's in manufacturing, finance and business, or agriculture etc. Frequently, they may even be considered 'competitors' with one another. Overall, the major benefit of a horizontal acquisition is the increased capacity of boosting a firm's client base and market share, in addition to opening-up the possibility to help a business expand its reach into brand-new markets.
Among the numerous types of acquisition strategies, there are two that individuals have a tendency to confuse with each other, perhaps due to the similar-sounding names. These are referred to as 'conglomerate' and 'congeneric' acquisitions, which are two really distinct strategies. To put it simply, a conglomerate acquisition is when the acquirer and the target firm are in entirely unassociated industries or engaged in separate activities. There have actually been several successful acquisition examples in business that have included two starkly different firms with no overlapping operations. Generally, the aim of this approach is diversification. For instance, in a situation where one services or product is struggling in the current market, firms that also own a diverse range of other services and products tend to be a lot more stable. On the other hand, a congeneric acquisition is when the acquiring company and the acquired firm are part of a similar industry and sell to the same kind of customer but have relatively different service or products. Among the main reasons why firms could decide to do this kind of acquisition is to simply broaden its line of product, as business people like Marc Rowan would likely confirm.
Lots of people assume that the acquisition process steps are constantly the same, regardless of what the company is. Nevertheless, this is a standard mistaken belief due to the fact that there are actually over 3 types of acquisitions in business, all of which come with their own operations and approaches. As business people like Arvid Trolle would likely validate, among the most frequently-seen acquisition techniques is referred to as a vertical acquisition. Basically, this acquisition is the polar opposite of a horizontal acquisition; it is where one firm acquires another company that is in a totally different place on the supply chain. For example, the acquirer company may be higher up on the supply chain but decide to acquire a company that is involved in an essential part of their business operations. In general, the beauty of vertical acquisitions is that they can bring in new earnings streams for the businesses, along with lower costs of production and streamline operations.