Business acquisitions can be a complicated procedure; here are the various approaches that business leaders utilize
Many individuals assume that the acquisition process steps are constantly the same, regardless of what the firm is. Nevertheless, this is a common mistaken belief because 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, among the most frequently-seen acquisition strategies is called 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 place on the supply chain. For instance, 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 functions. Overall, the appeal of vertical acquisitions is that they can bring in new revenue streams for the businesses, as well as decrease costs of production and streamline operations.
Among the many types of acquisition strategies, there are two that individuals have a tendency to confuse with each other, maybe due to 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 sectors or engaged in separate endeavors. There have been numerous successful acquisition examples in business that have included 2 starkly different companies without any overlapping operations. Generally, the objective of this technique is diversification. As an example, in a situation where one service or product is struggling in the current market, businesses that also own a diverse range of additional product or services tend to be much 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 sort of customer but have slightly different services or products. Among the main reasons why firms could opt to do this sort of acquisition is to simply expand its product lines, as business people like Marc Rowan would likely validate.
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 company purchases either the majority, or all of another company's shares to gain control of that business. Generally-speaking, there are about 3 types of acquisitions that are most typical in the business industry, as business individuals like Robert F. Smith would likely recognize. Among the most standard types of acquisition strategies in business is known as a horizontal acquisition. So, what does this mean? Essentially, a horizontal acquisition involves one company acquiring another company that is in the same market and is performing at a similar level. The two companies are basically part of the same industry and are on an equal playing field, whether that's in production, financing and business, or farming etc. Usually, they could even be considered 'rivals' with each other. On the whole, the major benefit 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 company grow its reach into new markets.