When two businesses experience an acquisition, it is most likely that they will do one of the following strategies
Many people assume that the acquisition process steps are always the same, regardless of what the firm is. Nonetheless, this is a common misunderstanding since there are actually over 3 types of acquisitions in business, all of which feature their own operations and approaches. As business individuals like Arvid Trolle would likely validate, among the most frequently-seen acquisition strategies is known as a vertical acquisition. Essentially, this acquisition is the polar opposite of a horizontal acquisition; it is where one company acquires another business that is in a totally different position on the supply chain. For instance, the acquirer business might be higher on the supply chain but opt to acquire a firm that is involved in a vital part of their business functions. On the whole, the appeal of vertical acquisitions is that they can generate brand-new revenue streams for the businesses, as well as decrease prices of manufacturing and streamline operations.
Prior to diving right 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 firm purchases either the majority, or all of another firm's shares to gain control of that firm. Generally-speaking, there are approximately 3 types of acquisitions that are most popular in the business industry, as business individuals like Robert F. Smith would likely understand. Among the most frequent types of acquisition strategies in business is referred to as a horizontal acquisition. So, what does this indicate? Basically, a horizontal acquisition involves one company acquiring another business that is in the same market and is performing at a similar level. Both businesses are primarily part of the very same market and are on an equal playing field, whether that's in manufacturing, finance and business, or agriculture etc. Often, they might even be considered 'rivals' with each other. Generally, the primary advantage of a horizontal acquisition is the increased capacity of enhancing a company's customer base and market share, along with opening-up the possibility to help a business grow its reach into new markets.
Amongst the many types of acquisition strategies, there are 2 that individuals usually tend to confuse with each other, possibly due to the similar-sounding names. These are known as 'conglomerate' and 'congeneric' acquisitions, which are 2 rather distinct strategies. To put it simply, a conglomerate acquisition is when the acquirer and the target company are in completely unconnected sectors or engaged in separate endeavors. There have been many successful acquisition examples in business that have included 2 starkly different firms with no overlapping operations. Usually, the aim of this approach is diversification. As an example, in a situation where one product and services is struggling in the current market, companies that also possess a diverse variety of additional services and products tend to be more secure. On the other hand, a congeneric acquisition is when the acquiring firm and the acquired business are part of a comparable market and sell to the same type of consumer but have slightly different products or services. Among the primary reasons why businesses may decide to do this sort of acquisition is to simply broaden its product lines, as business individuals like Marc Rowan would likely verify.