When 2 companies undergo an acquisition, it is likely that they will do one of the following approaches
Prior to diving into the ins and outs of acquisition strategies, the 1st thing to do is have a firm understanding on what an acquisition truly is. Not to be confused with a merger, an acquisition is when one company purchases either the majority, or all of another business's shares to gain control of that company. Generally-speaking, there are about 3 types of acquisitions that are most common in the business sector, as business people like Robert F. Smith would likely recognize. One of the most standard types of acquisition strategies in business is referred to as a horizontal acquisition. So, what does this suggest? Essentially, a horizontal acquisition entails one company acquiring another firm that is in the same market and is performing at a comparable level. The two businesses are basically part of the exact same industry and are on an equal playing field, whether that's in manufacturing, financing and business, or agriculture etc. Often, they could even be considered 'competitors' with each other. Generally, the primary benefit of a horizontal acquisition is the increased potential of boosting a business's consumer base and market share, as well as opening-up the possibility to help a company enlarge its reach into new markets.
Many individuals assume that the acquisition process steps are always the same, whatever the company is. Nevertheless, this is a typical false impression because there are actually over 3 types of acquisitions in business, all of which include their own procedures and approaches. As business individuals like Arvid Trolle would likely confirm, among the most frequently-seen acquisition methods is known as a vertical acquisition. Essentially, this acquisition is the polar opposite of a horizontal acquisition; it is where one company acquires another company that is in a totally different place on the supply chain. For instance, the acquirer business might be higher on the supply chain but decide to acquire a company that is involved in an essential part of their business procedures. On the whole, the beauty of vertical acquisitions is that they can generate new income streams for the businesses, in addition to decrease prices of production and streamline operations.
Amongst the numerous types of acquisition strategies, there are 2 that individuals tend to confuse with each other, possibly because of the similar-sounding names. These are referred to as '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 completely unassociated industries or engaged in separate ventures. There have actually been many successful acquisition examples in business that have included 2 starkly different businesses without any overlapping operations. Generally, the aim of this strategy is diversification. For instance, in a scenario where one services or product is struggling in the current market, firms that also possess a diverse variety of other services and products often tend to be more stable. On the other hand, a congeneric acquisition is when the acquiring business and the acquired business belong to a comparable sector and sell to the same type of customer but have relatively different products or services. Among the main reasons why companies might decide to do this kind of acquisition is to simply increase its line of product, as business individuals like Marc Rowan would likely confirm.