A frequent acquisition strategy example in the business field

A frequent acquisition strategy example in the business field

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When 2 companies go through an acquisition, it is very likely that they will do one of the following techniques

Among the countless types of acquisition strategies, there are two that people usually tend to confuse with each other, perhaps due to the similar-sounding names. These are referred to as '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 industries or engaged in separate endeavors. There have actually been several successful acquisition examples in business that have involved two starkly different firms without any overlapping operations. Generally, the purpose of this strategy is diversification. For instance, in a circumstance where one product and services is struggling in the current market, businesses that also own a diverse range of other services and products often tend to be far more secure. On the other hand, a congeneric acquisition is when the acquiring company and the acquired company are part of a similar market and sell to the same kind of customer but have slightly different services or products. One of the primary reasons why firms could opt to do this sort of acquisition is to simply increase its line of product, as business individuals like Marc Rowan would likely validate.

Many people assume that the acquisition process steps are always the same, no matter what the company is. However, this is a common misconception because there are actually over 3 types of acquisitions in business, all of which come with their own procedures and approaches. As business individuals like Arvid Trolle would likely validate, among the most frequently-seen acquisition methods is called a vertical acquisition. Basically, this acquisition is the polar opposite of a horizontal acquisition; it is where one business acquires another business that is in a totally different position on the supply chain. For example, the acquirer company might be higher on the supply chain but opt to acquire a business that is involved in an essential part of their business procedures. In general, the beauty of vertical acquisitions is that they can generate brand-new earnings streams for the businesses, in addition to lower costs of production and streamline operations.

Prior to diving right into the ins and outs of acquisition strategies, the initial thing to do is have a firm understanding on what an acquisition actually is. Not to be mixed-up with a merger, an acquisition is when one firm purchases either the majority, or all of another business's shares to gain control of that business. Generally-speaking, there are around 3 types of acquisitions that are most common in the business sector, as business individuals like Robert F. Smith would likely understand. One of the most common types of acquisition strategies in business is called a horizontal acquisition. So, what does this suggest? Basically, a horizontal acquisition involves one company acquiring another firm that is in the exact same market and is performing at a similar level. Both businesses are basically part of the very same sector and are on an equal playing field, whether that's in manufacturing, financing and business, or agriculture etc. Frequently, they might even be considered 'rivals' with one another. Overall, the major advantage of a horizontal acquisition is the increased potential of raising a business's customer base and market share, as well as opening-up the possibility to help a business expand its reach into brand-new markets.