A frequent acquisition strategy example in the business field

A frequent acquisition strategy example in the business field

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Here is a quick guide to knowing the different acquisition possibilities and approaches that business leaders can select from

Amongst the numerous types of acquisition strategies, there are two that people have a tendency to confuse with each other, perhaps due to the similar-sounding names. These are known as 'conglomerate' and 'congeneric' acquisitions, which are 2 rather distinct strategies. To put it simply, a conglomerate acquisition is when the acquirer and the target company are in completely unrelated industries or engaged in different ventures. There have actually been numerous successful acquisition examples in business that have involved two starkly different businesses without any overlapping operations. Normally, the objective of this strategy is diversification. For example, in a scenario where one product and services is struggling in the current market, firms that also have a diverse range of additional product or services have a tendency to be much more stable. On the other hand, a congeneric acquisition is when the acquiring firm and the acquired firm are part of a similar sector and sell to the same sort of client but have slightly different service or products. Among the primary reasons why firms might opt to do this sort of acquisition is to simply broaden its product lines, as business individuals like Marc Rowan would likely validate.

Prior to diving right into the ins and outs of acquisition strategies, the first thing to do is have a solid understanding on what an acquisition actually is. Not to be confused 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 company. Generally-speaking, there are approximately 3 types of acquisitions that are most common in the business world, as business individuals like Robert F. Smith would likely know. Among the most frequent types of acquisition strategies in business is known as a horizontal acquisition. So, what does this suggest? Essentially, a horizontal acquisition entails one company acquiring an additional company that is in the very same market and is performing at a similar level. Both firms are basically part of the exact same industry and are on a level playing field, whether that's in manufacturing, financing and business, or agriculture etc. Usually, they may even be considered 'rivals' with one another. On the whole, the primary benefit of a horizontal acquisition is the increased capacity of increasing a business's customer base and market share, in addition to 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 firm 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 confirm, one of the most frequently-seen acquisition methods is known as a vertical acquisition. Basically, this acquisition is the polar opposite of a horizontal acquisition; it is where one firm acquires another business that is in an entirely different position on the supply chain. For instance, the acquirer firm may be higher up on the supply chain but opt to acquire a company that is involved in an essential part of their business functions. Overall, the appeal of vertical acquisitions is that they can generate new earnings streams for the businesses, along with lower costs of manufacturing and streamline operations.