An usual acquisition strategy example in the business field

An usual acquisition strategy example in the business field

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Below is a short overview to comprehending the various acquisition options and techniques that business leaders can choose from

Before diving right into the ins and outs of acquisition strategies, the very first thing to do is have a solid understanding on what an acquisition truly is. Not to be confused with a merger, an acquisition is when one business purchases either the majority, or all of another company's shares to gain control of that business. Generally-speaking, there are approximately 3 types of acquisitions that are most common in the business industry, as business individuals like Robert F. Smith would likely know. Among the most common types of acquisition strategies in business is referred to as a horizontal acquisition. So, what does this suggest? Essentially, a horizontal acquisition involves one company acquiring a different company that is in the exact same market and is performing at a comparable level. Both companies are generally part of the very same industry and are on an equal playing field, whether that's in production, financing and business, or agriculture etc. Typically, they could even be considered 'competitors' with one another. Generally, the major advantage of a horizontal acquisition is the increased capacity of boosting a firm's customer base and market share, in addition to opening-up the chance to help a firm expand its reach into new markets.

Many people presume that the acquisition process steps are constantly the same, whatever the company is. However, this is a frequent false impression 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 strategies is known as a vertical acquisition. Essentially, this acquisition is the polar opposite of a horizontal acquisition; it is where one business acquires another business that is in a totally different place on the supply chain. As an example, the acquirer firm might be higher on the supply chain but opt to acquire a company that is involved in a key part of their business operations. In general, the beauty of vertical acquisitions is that they can bring in new earnings streams for the businesses, in addition to decrease expenses of manufacturing and streamline operations.

Among the several types of acquisition strategies, there are 2 that individuals usually tend to confuse with each other, maybe due to the similar-sounding names. These are known as 'conglomerate' and 'congeneric' acquisitions, which are two very separate strategies. To put it simply, a conglomerate acquisition is when the acquirer and the target company are in completely unrelated industries or engaged in separate activities. There have actually been several successful acquisition examples in business that have included 2 starkly different businesses without any overlapping operations. Normally, the goal of this technique is diversification. For instance, in a circumstance where one service or product is struggling in the current market, firms that also have a diverse range of other products and services tend to be more secure. On the other hand, a congeneric acquisition is when the acquiring firm and the acquired business are part of a similar industry and sell to the same sort of consumer but have relatively different services or products. One of the main reasons why companies may decide to do this kind of acquisition is to simply increase its line of product, as business people like Marc Rowan would likely confirm.