Below is a short overview to knowing the different acquisition possibilities and strategies that business leaders can pick from
Among the several types of acquisition strategies, there are two that people have a tendency to confuse with each other, possibly due to the similar-sounding names. These are known as 'conglomerate' and 'congeneric' acquisitions, which are 2 rather independent strategies. To put it simply, a conglomerate acquisition is when the acquirer and the target firm are in totally unassociated industries or engaged in separate ventures. There have actually been numerous successful acquisition examples in business that have involved two starkly different businesses without any overlapping operations. Normally, the objective of this strategy is diversification. As an example, in a scenario where one product and services is struggling in the current market, firms that also have a diverse range of other products and services often tend to be far more steady. On the other hand, a congeneric acquisition is when the acquiring company and the acquired company belong to a similar industry and sell to the same sort of client but have slightly different products or services. One of the major reasons why businesses may decide to do this sort of acquisition is to simply increase its product lines, as business people like Marc Rowan would likely confirm.
Before diving right into the ins and outs of acquisition strategies, the very first thing to do is have a firm understanding on what an acquisition truly is. Not to be confused with a merger, an acquisition is when one firm purchases either the majority, or all of another business's shares to gain control of that company. Generally-speaking, there are approximately 3 types of acquisitions that are most typical in the business world, as business individuals like Robert F. Smith would likely understand. Among the most prevalent types of acquisition strategies in business is referred to as a horizontal acquisition. So, what does this suggest? Basically, a horizontal acquisition involves one company acquiring a different company that is in the very same market and is performing at a similar level. Both firms are basically part of the exact same industry and are on a level playing field, whether that's in manufacturing, financing and business, or agriculture etc. Usually, they could even be considered 'competitors' with one another. Generally, the primary benefit of a horizontal acquisition is the increased capacity of increasing a firm's customer base and market share, along with opening-up the opportunity to help a firm grow its reach into new markets.
Lots of people assume that the acquisition process steps are always the same, no matter what the firm is. However, this is a standard misconception due to the fact that there are actually over 3 types of acquisitions in business, all of which come with their very own procedures and approaches. 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 business might be higher up on the supply chain but decide to acquire a firm that is involved in a key part of their business procedures. On the whole, the beauty of vertical acquisitions is that they can bring in brand-new income streams for the businesses, in addition to decrease costs of production and streamline operations.