Here is a quick guide to knowing the various acquisition possibilities and strategies that business leaders can select from
Many individuals presume that the acquisition process steps are constantly the same, whatever the business is. However, this is a frequent false impression since there are actually over 3 types of acquisitions in business, all of which come with their own operations and approaches. As business individuals like Arvid Trolle would likely confirm, one of the most frequently-seen acquisition strategies is referred to 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 an entirely different position on the supply chain. For example, the acquirer company may be higher up on the supply chain but decide to acquire a business that is involved in a crucial part of their business functions. On the whole, the appeal of vertical acquisitions is that they can bring in new income streams for the businesses, as well as lower costs of production and streamline operations.
Before diving into the ins and outs of acquisition strategies, the first thing to do is have a firm understanding on what an acquisition actually is. Not to be confused with a merger, an acquisition is when one company purchases either the majority, or all of another company's shares to gain control of that company. Generally-speaking, there are around 3 types of acquisitions that are most common in the business world, as business individuals like Robert F. Smith would likely recognize. Among the most standard types of acquisition strategies in business is called a horizontal acquisition. So, what does this suggest? Basically, a horizontal acquisition entails one company acquiring an additional business that is in the exact same market and is performing at a similar level. The two companies are basically part of the same industry and are on a level playing field, whether that's in production, financing and business, or agriculture etc. Commonly, they could even be considered 'rivals' with each other. On the whole, the major benefit of a horizontal acquisition is the increased possibility of raising a firm's consumer base and market share, along with opening-up the chance to help a business grow its reach into new markets.
Amongst the many types of acquisition strategies, there are 2 that individuals commonly tend to confuse with each other, perhaps as a result of the similar-sounding names. These are called 'conglomerate' and 'congeneric' acquisitions, which are 2 very separate 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 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 scenario where one product and services is struggling in the current market, firms that also own a diverse variety of additional services and products tend to be far more steady. On the other hand, a congeneric acquisition is when the acquiring company and the acquired firm belong to a similar sector and sell to the same kind of customer but have relatively different service or products. Among the main reasons why businesses may decide to do this sort of acquisition is to simply broaden its product lines, as business individuals like Marc Rowan would likely confirm.