A frequent acquisition strategy example in the business area

A frequent acquisition strategy example in the business area

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When two companies undergo an acquisition, it is likely that they will do one of the following approaches

Many people think that the acquisition process steps are always the same, no matter what the business is. However, this is a common false impression since there are actually over 3 types of acquisitions in business, all of which come with their very own operations and strategies. As business individuals like Arvid Trolle would likely validate, one of the most frequently-seen acquisition methods is referred to as a vertical acquisition. Essentially, this acquisition is the polar opposite of a horizontal acquisition; it is where one business acquires another company that is in a totally different position on the supply chain. For instance, the acquirer firm may be higher on the supply chain but decide to acquire a firm that is involved in a key part of their business procedures. Overall, the appeal of vertical acquisitions is that they can bring in brand-new income streams for the businesses, in addition to lower prices of production and streamline operations.

Among the many types of acquisition strategies, there are 2 that individuals often tend to confuse with each other, probably because of the similar-sounding names. These are called 'conglomerate' and 'congeneric' acquisitions, which are two rather separate strategies. To put it simply, a conglomerate acquisition is when the acquirer and the target firm are in completely unconnected industries or engaged in different ventures. There have been lots of successful acquisition examples in business that have involved two starkly different businesses with no overlapping operations. Generally, the aim of this technique is diversification. As an example, in a situation where one product and services is struggling in the current market, companies that also have a diverse variety of other services and products often tend to be much more secure. On the other hand, a congeneric acquisition is when the acquiring company and the acquired business belong to a comparable industry and sell to the same type of client but have relatively different service or products. One of the main reasons why firms could opt to do this kind of acquisition is to simply broaden its line of product, as business individuals like Marc Rowan would likely confirm.

Prior to diving right into the ins and outs of acquisition strategies, the 1st 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 business 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 popular in the business world, as business people like Robert F. Smith would likely understand. One of the most common types of acquisition strategies in business is referred to as a horizontal acquisition. So, what does this indicate? Basically, a horizontal acquisition entails one company acquiring another business that is in the exact same market and is performing at a comparable level. Both businesses are primarily part of the very same industry and are on an equal playing field, whether that's in manufacturing, finance and business, or agriculture etc. Typically, they may even be considered 'competitors' with one another. In general, the primary advantage of a horizontal acquisition is the increased capacity of boosting a business's client base and market share, in addition to opening-up the chance to help a firm widen its reach into brand-new markets.