When 2 companies go through an acquisition, it is very likely that they will do one of the following strategies
Prior to diving into the ins and outs of acquisition strategies, the initial thing to do is have a firm understanding on what an acquisition truly is. Not to be mixed-up with a merger, an acquisition is when one business purchases either the majority, or all of another firm's shares to gain control of that company. Generally-speaking, there are approximately 3 types of acquisitions that are most common in the business industry, as business people like Robert F. Smith would likely understand. Among the most usual types of acquisition strategies in business is called a horizontal acquisition. So, what does this imply? Basically, a horizontal acquisition involves one company acquiring an additional firm that is in the same market and is performing at a similar level. Both companies are generally part of the same industry and are on a level playing field, whether that's in production, finance and business, or farming etc. Often, they may even be considered 'competitors' with one another. Overall, the primary benefit of a horizontal acquisition is the increased potential of enhancing a business's consumer base and market share, as well as opening-up the chance to help a firm expand its reach into new markets.
Many individuals think that the acquisition process steps are always the same, no matter what the business is. Nonetheless, this is a common misunderstanding due to the fact that there are actually over 3 types of acquisitions in business, all of which feature their very own procedures and strategies. As business people like Arvid Trolle would likely verify, among the most frequently-seen acquisition strategies is referred to as a vertical acquisition. Basically, this acquisition is the polar opposite of a horizontal acquisition; it is where one business acquires another firm that is in an entirely different place on the supply chain. For instance, the acquirer business might be higher on the supply chain but decide to acquire a business that is involved in a vital part of their business operations. In general, the beauty of vertical acquisitions is that they can generate new earnings streams for the businesses, along with lower costs of production and streamline operations.
Among the countless types of acquisition strategies, there are 2 that individuals often tend to confuse with each other, maybe as a result of the similar-sounding names. These are called 'conglomerate' and 'congeneric' acquisitions, which are 2 very separate strategies. To put it simply, a conglomerate acquisition is when the acquirer and the target company are in totally unconnected sectors or engaged in different activities. There have been numerous successful acquisition examples in business that have involved two starkly different companies with no overlapping operations. Typically, the objective of this strategy is diversification. For example, in a situation where one services or product is struggling in the current market, firms that also own a diverse range of other services and products tend to be more stable. On the other hand, a congeneric acquisition is when the acquiring firm and the acquired firm belong to a similar market and sell to the same type of customer but have relatively different services or products. One of the main reasons why businesses could opt to do this sort of acquisition is to simply increase its product lines, as business people like Marc Rowan would likely confirm.