When 2 businesses go through an acquisition, it is most likely that they will do one of the following strategies
Amongst the countless types of acquisition strategies, there are two that people usually tend to confuse with each other, perhaps due to the similar-sounding names. These are referred to as 'conglomerate' and 'congeneric' acquisitions, which are 2 rather separate strategies. To put it simply, a conglomerate acquisition is when the acquirer and the target firm are in completely unrelated markets or engaged in different activities. There have been several successful acquisition examples in business that have included two starkly different companies without any overlapping operations. Generally, the objective of this technique is diversification. As an example, in a scenario where one product or service is struggling in the current market, firms that also possess a diverse variety of other services and products have a tendency to be a lot more secure. On the other hand, a congeneric acquisition is when the acquiring firm and the acquired company are part of a similar market and sell to the same sort of consumer but have relatively different products or services. One of the main reasons why firms may choose to do this type of acquisition is to simply increase its line of product, as business individuals like Marc Rowan would likely verify.
Many people assume that the acquisition process steps are always the same, no matter what the business is. Nevertheless, this is a normal false impression due to the fact that there are actually over 3 types of acquisitions in business, all of which feature their very own operations and approaches. As business individuals like Arvid Trolle would likely validate, among the most frequently-seen acquisition techniques 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 business that is in a totally different position on the supply chain. For example, the acquirer company may be higher on the supply chain but opt to acquire a firm that is involved in a vital part of their business operations. Overall, the appeal of vertical acquisitions is that they can generate brand-new revenue streams for the businesses, along with decrease prices of manufacturing and streamline operations.
Prior to diving right into the ins and outs of acquisition strategies, the initial thing to do is have a solid understanding on what an acquisition truly is. Not to be mixed-up with a merger, an acquisition is when one firm purchases either the majority, or all of another firm's shares to gain control of that business. Generally-speaking, there are about 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 frequent types of acquisition strategies in business is referred to as a horizontal acquisition. So, what does this imply? Essentially, a horizontal acquisition involves one company acquiring a different firm that is in the exact same market and is performing at a similar level. Both firms are essentially part of the same industry and are on a level playing field, whether that's in manufacturing, finance and business, or farming etc. Usually, they may even be considered 'competitors' with one another. On the whole, the primary advantage of a horizontal acquisition is the increased possibility of boosting a business's customer base and market share, along with opening-up the chance to help a company expand its reach into brand-new markets.