When 2 businesses undergo an acquisition, it is very likely that they will do one of the following strategies
Amongst the many types of acquisition strategies, there are two that individuals often tend to confuse with each other, perhaps because of 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 firm are in completely unconnected industries or engaged in different ventures. There have been lots of successful acquisition examples in business that have included two starkly different companies without any overlapping operations. Normally, the goal of this strategy is diversification. As an example, in a scenario where one service or product is struggling in the current market, companies that also possess a diverse variety of other product or services have a tendency to be more secure. On the other hand, a congeneric acquisition is when the acquiring business and the acquired company belong to a similar sector and sell to the same kind of customer but have relatively different services or products. Among the primary reasons why companies may decide to do this sort of acquisition is to simply broaden 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 first thing to do is have a solid 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 company. Generally-speaking, there are approximately 3 types of acquisitions that are most common in the business sector, as business people like Robert F. Smith would likely recognize. One of the most common types of acquisition strategies in business is referred to as a horizontal acquisition. So, what does this mean? Essentially, a horizontal acquisition entails one company acquiring another firm that is in the same market and is performing at a comparable level. The two firms are primarily part of the exact same sector and are on an equal playing field, whether that's in manufacturing, financing and business, or agriculture etc. Commonly, they might even be considered 'rivals' with each other. In general, the primary benefit of a horizontal acquisition is the increased potential of boosting a company's client base and market share, along with opening-up the opportunity to help a company widen its reach into new markets.
Lots of people think that the acquisition process steps are constantly the same, no matter what the business is. Nonetheless, this is a common mistaken belief due to the fact that 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 confirm, one of the most frequently-seen acquisition techniques is referred to as a vertical acquisition. Basically, 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. As an example, the acquirer company may be higher up on the supply chain but decide to acquire a business that is involved in a vital part of their business functions. Overall, the beauty of vertical acquisitions is that they can bring in new earnings streams for the businesses, along with decrease prices of manufacturing and streamline operations.