Business acquisitions can be a complicated process; here are the various strategies that business leaders employ
Amongst the many types of acquisition strategies, there are two that individuals tend to confuse with each other, possibly due to the similar-sounding names. These are known as 'conglomerate' and 'congeneric' acquisitions, which are two 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 lots of successful acquisition examples in business that have involved two starkly different businesses without any overlapping operations. Normally, the objective of this strategy is diversification. For example, in a scenario where one product and services is struggling in the current market, businesses that also have a diverse range of additional product or services have a tendency to be much more stable. On the other hand, a congeneric acquisition is when the acquiring firm and the acquired business are part of a similar sector and sell to the same kind of customer but have relatively different services or products. One of the major 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 validate.
Prior to diving 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 mixed-up with a merger, an acquisition is when one business purchases either the majority, or all of another company's shares to gain control of that firm. Generally-speaking, there are about 3 types of acquisitions that are most popular in the business industry, as business people like Robert F. Smith would likely recognize. One of the most common types of acquisition strategies in business is called a horizontal acquisition. So, what does this imply? Basically, a horizontal acquisition involves one company acquiring another business that is in the same market and is performing at a comparable level. The two businesses are essentially part of the very same market and are on an equal playing field, whether that's in production, finance and business, or agriculture etc. Typically, they might even be considered 'rivals' with each other. In general, the major advantage of a horizontal acquisition is the increased possibility of boosting a firm's client base and market share, as well as opening-up the chance to help a firm grow its reach into brand-new markets.
Lots of people think that the acquisition process steps are always the same, whatever the company is. Nonetheless, this is a typical false impression since there are actually over 3 types of acquisitions in business, all of which feature their own operations and strategies. As business individuals like Arvid Trolle would likely confirm, one of the most frequently-seen acquisition techniques is called a vertical acquisition. Essentially, this acquisition is the polar opposite of a horizontal acquisition; it is where one business acquires another firm that is in a completely different place on the supply chain. As an example, the acquirer company might be higher 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 revenue streams for the businesses, as well as decrease prices of production and streamline operations.