A basic acquisition strategy example in the business industry

A basic acquisition strategy example in the business industry

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Listed below are a couple of business approaches relating to acquisitions

Amongst the numerous types of acquisition strategies, there are two that people have a tendency to confuse with each other, possibly due to the similar-sounding names. These are known as 'conglomerate' and 'congeneric' acquisitions, which are 2 rather independent strategies. To put it simply, a conglomerate acquisition is when the acquirer and the target firm are in entirely unconnected markets or engaged in separate activities. There have been many successful acquisition examples in business that have involved 2 starkly different businesses without any overlapping operations. Typically, the objective of this strategy is diversification. For example, in a scenario where one product or service is struggling in the current market, businesses that also possess a diverse range of other products and services often tend to be far more steady. On the other hand, a congeneric acquisition is when the acquiring business and the acquired company belong to a comparable market and sell to the same type of customer but have relatively different services or products. One of the main reasons why businesses may choose to do this kind of acquisition is to simply increase its line of product, as business people like Marc Rowan would likely validate.

Prior to diving 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 popular in the business industry, as business people like Robert F. Smith would likely recognize. Among the most prevalent types of acquisition strategies in business is known as a horizontal acquisition. So, what does this mean? Basically, a horizontal acquisition involves one company acquiring another firm that is in the exact same market and is performing at a similar level. Both firms are basically part of the very same market and are on an equal playing field, whether that's in production, finance and business, or farming etc. Frequently, they could even be considered 'competitors' with each other. Generally, the main benefit of a horizontal acquisition is the increased potential of boosting a company's consumer base and market share, as well as opening-up the possibility to help a company widen its reach into new markets.

Many individuals presume that the acquisition process steps are constantly the same, regardless of what the company is. Nevertheless, this is a typical misconception due to the fact that there are actually over 3 types of acquisitions in business, all of which come with their very own procedures and strategies. As business individuals like Arvid Trolle would likely verify, among the most frequently-seen acquisition techniques is called a vertical acquisition. Essentially, 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. For instance, the acquirer firm may be higher on the supply chain but opt to acquire a business that is involved in a vital part of their business operations. Generally, the appeal of vertical acquisitions is that they can bring in brand-new income streams for the businesses, in addition to decrease costs of production and streamline operations.