Firm acquisitions can be a challenging process; below are the different approaches that business leaders employ
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 known as 'conglomerate' and 'congeneric' acquisitions, which are two rather independent strategies. To put it simply, a conglomerate acquisition is when the acquirer and the target firm are in totally unassociated industries or engaged in separate ventures. There have actually been lots of successful acquisition examples in business that have involved two starkly different businesses without any overlapping operations. Normally, the objective of this strategy is diversification. As an example, in a circumstance where one services or product is struggling in the current market, companies that also own a diverse variety of additional services and products tend to be more secure. On the other hand, a congeneric acquisition is when the acquiring business and the acquired business are part of a comparable market and sell to the same type of consumer but have relatively different services or products. One of the major reasons why firms might opt to do this type of acquisition is to simply expand its line of product, as business people like Marc Rowan would likely validate.
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 actually is. Not to be mixed-up 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 popular in the business realm, 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 imply? 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 manufacturing, financing and business, or agriculture etc. Often, they may even be considered 'competitors' with one another. On the whole, the main benefit of a horizontal acquisition is the increased potential of raising 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 constantly the same, no matter what the business is. However, this is a standard 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 decide to acquire a firm that is involved in a key part of their business procedures. On the whole, the beauty of vertical acquisitions is that they can bring in brand-new income streams for the businesses, in addition to decrease prices of production and streamline operations.