A prevalent acquisition strategy example in the business area

A prevalent acquisition strategy example in the business area

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Company acquisitions can be a difficult process; below are the different techniques that business leaders use

Among the countless types of acquisition strategies, there are 2 that individuals often tend to confuse with each other, maybe because of the similar-sounding names. These are referred to as 'conglomerate' and 'congeneric' acquisitions, which are two very independent strategies. To put it simply, a conglomerate acquisition is when the acquirer and the target firm are in entirely unassociated markets or engaged in separate activities. There have been several successful acquisition examples in business that have included 2 starkly different firms with no overlapping operations. Usually, the purpose of this approach is diversification. For instance, in a circumstance where one services or product is struggling in the current market, companies that also possess a diverse variety of other products and services tend to be far more steady. On the other hand, a congeneric acquisition is when the acquiring business and the acquired company belong to a comparable market and sell to the same type of consumer but have relatively different service or products. Among the main reasons why companies could choose to do this kind of acquisition is to simply increase its line of product, as business people like Marc Rowan would likely confirm.

Before diving right into the ins and outs of acquisition strategies, the initial 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 firm's shares to gain control of that business. Generally-speaking, there are around 3 types of acquisitions that are most typical in the business realm, as business individuals like Robert F. Smith would likely understand. One of the most standard types of acquisition strategies in business is referred to as a horizontal acquisition. So, what does this mean? Basically, a horizontal acquisition involves one company acquiring a different business that is in the same market and is performing at a comparable level. The two businesses are essentially part of the very same market and are on a level playing field, whether that's in production, financing and business, or farming etc. Often, they could even be considered 'competitors' with each other. In general, the major advantage of a horizontal acquisition is the increased possibility of enhancing a firm's customer base and market share, along with opening-up the opportunity to help a firm broaden its reach into brand-new markets.

Many people think that the acquisition process steps are always the same, whatever the company is. Nevertheless, this is a common misconception since there are actually over 3 types of acquisitions in business, all of which come with their own operations and strategies. As business individuals like Arvid Trolle would likely validate, one of 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 firm acquires another company that is in a totally different place on the supply chain. For example, the acquirer business might be higher up on the supply chain but opt to acquire a firm that is involved in an essential part of their business procedures. Overall, the beauty of vertical acquisitions is that they can generate brand-new income streams for the businesses, in addition to decrease costs of production and streamline operations.