Here is a quick guide to knowing the different acquisition possibilities and strategies that business leaders can select from
Amongst the countless types of acquisition strategies, there are two that people usually tend to confuse with each other, perhaps because of the similar-sounding names. These are called 'conglomerate' and 'congeneric' acquisitions, which are 2 very distinct strategies. To put it simply, a conglomerate acquisition is when the acquirer and the target firm are in entirely unrelated markets or engaged in different ventures. There have been numerous successful acquisition examples in business that have involved 2 starkly different businesses with no overlapping operations. Typically, the goal of this approach is diversification. As an example, in a situation where one services or product is struggling in the current market, firms that also possess a diverse variety of other products and services have a tendency to be a lot more secure. On the other hand, a congeneric acquisition is when the acquiring firm and the acquired company are part of a similar market and sell to the same kind of client but have relatively different service or products. Among the major reasons why companies might decide to do this type of acquisition is to simply broaden its line of product, as business individuals like Marc Rowan would likely validate.
Many individuals assume that the acquisition process steps are always the same, no matter what the company is. However, this is a typical misunderstanding since there are actually over 3 types of acquisitions in business, all of which include their own procedures and strategies. As business people like Arvid Trolle would likely confirm, one of 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 firm acquires another firm that is in an entirely different place on the supply chain. As an example, the acquirer firm might be higher up on the supply chain but decide to acquire a company that is involved in a key part of their business operations. Overall, the appeal of vertical acquisitions is that they can generate brand-new earnings streams for the businesses, in addition to lower costs of production and streamline operations.
Prior to diving right into the ins and outs of acquisition strategies, the initial thing to do is have a firm understanding on what an acquisition actually is. Not to be confused 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 business. Generally-speaking, there are about 3 types of acquisitions that are most typical in the business world, 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 business that is in the same market and is performing at a comparable level. Both firms are essentially part of the same sector and are on a level playing field, whether that's in manufacturing, financing and business, or farming etc. Typically, they may even be considered 'competitors' with each other. Generally, the main advantage of a horizontal acquisition is the increased possibility of boosting a company's consumer base and market share, in addition to opening-up the chance to help a company enlarge its reach into new markets.