A common acquisition strategy example in the business sector

A common acquisition strategy example in the business sector

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Business acquisitions can be a complex procedure; here are the different approaches that business leaders utilize

Before diving into the ins and outs of acquisition strategies, the first 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 firm 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 typical in the business realm, as business people like Robert F. Smith would likely know. One of the most typical types of acquisition strategies in business is known as a horizontal acquisition. So, what does this mean? Basically, a horizontal acquisition entails one company acquiring an additional business that is in the same market and is performing at a similar level. Both businesses are generally part of the exact same industry and are on a level playing field, whether that's in manufacturing, financing and business, or farming etc. Typically, they might even be considered 'competitors' with each other. Generally, the primary advantage of a horizontal acquisition is the increased possibility of raising a business's client base and market share, as well as opening-up the possibility to help a business broaden its reach into new markets.

Among the numerous types of acquisition strategies, there are two that individuals usually tend to confuse with each other, possibly due to the similar-sounding names. These are called 'conglomerate' and 'congeneric' acquisitions, which are two rather distinct strategies. To put it simply, a conglomerate acquisition is when the acquirer and the target company are in entirely unassociated industries or engaged in different endeavors. There have been several successful acquisition examples in business that have involved two starkly different businesses without any overlapping operations. Usually, the purpose of this technique is diversification. For example, in a circumstance where one services or product is struggling in the current market, businesses that also have a diverse variety of other product or services have a tendency to be more steady. On the other hand, a congeneric acquisition is when the acquiring company and the acquired business belong to a similar sector and sell to the same type of consumer but have slightly different service or products. One of the primary reasons why businesses may opt to do this kind of acquisition is to simply broaden its line of product, as business people like Marc Rowan would likely verify.

Lots of people think that the acquisition process steps are always the same, whatever the company is. Nevertheless, this is a normal misunderstanding due to the fact that there are actually over 3 types of acquisitions in business, all of which come with their own operations and approaches. As business people like Arvid Trolle would likely verify, 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 business acquires another firm that is in a completely different position on the supply chain. For instance, the acquirer firm may be higher up on the supply chain but decide to acquire a business that is involved in a vital part of their business operations. In general, the appeal of vertical acquisitions is that they can generate new income streams for the businesses, along with decrease costs of production and streamline operations.