A basic acquisition strategy example in the business industry

A basic acquisition strategy example in the business industry

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

Amongst the several types of acquisition strategies, there are 2 that people usually tend to confuse with each other, probably due to the similar-sounding names. These are referred to 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 company are in totally unassociated sectors or engaged in separate activities. There have been lots of successful acquisition examples in business that have included two starkly different companies with no overlapping operations. Normally, the purpose of this strategy is diversification. For example, in a circumstance where one product and services is struggling in the current market, businesses that also own a diverse range of other services and products often tend to be far more secure. On the other hand, a congeneric acquisition is when the acquiring company and the acquired company are part of a similar market and sell to the same kind of consumer but have relatively different service or products. One of the main reasons why companies might decide to do this type of acquisition is to simply broaden its product lines, as business individuals like Marc Rowan would likely validate.

Many individuals think that the acquisition process steps are constantly the same, whatever the firm is. Nonetheless, this is a common misconception because there are actually over 3 types of acquisitions in business, all of which come with their own operations and approaches. As business individuals like Arvid Trolle would likely validate, among the most frequently-seen acquisition methods is called a vertical acquisition. Basically, this acquisition is the polar opposite of a horizontal acquisition; it is where one business acquires another business that is in a totally different position on the supply chain. For example, the acquirer company may be higher up on the supply chain but opt to acquire a firm that is involved in a vital part of their business procedures. In general, the beauty of vertical acquisitions is that they can bring in brand-new revenue streams for the businesses, in addition to lower expenses of production and streamline operations.

Before diving right into the ins and outs of acquisition strategies, the 1st thing to do is have a solid understanding on what an acquisition actually is. Not to be confused with a merger, an acquisition is when one company purchases either the majority, or all of another firm's shares to gain control of that firm. Generally-speaking, there are about 3 types of acquisitions that are most typical in the business realm, as business people like Robert F. Smith would likely recognize. Among the most frequent types of acquisition strategies in business is referred to as a horizontal acquisition. So, what does this imply? Essentially, a horizontal acquisition entails one company acquiring an additional company that is in the same market and is performing at a comparable level. Both firms are basically part of the very same sector and are on an equal playing field, whether that's in manufacturing, financing and business, or farming etc. Typically, they might even be considered 'competitors' with each other. In general, the main benefit of a horizontal acquisition is the increased possibility of boosting a company's customer base and market share, along with opening-up the chance to help a company expand its reach into brand-new markets.