When two businesses go through an acquisition, it is likely that they will do one of the following strategies
Prior to diving right into the ins and outs of acquisition strategies, the initial thing to do is have a firm understanding on what an acquisition truly is. Not to be confused with a merger, an acquisition is when one firm purchases either the majority, or all of another company's shares to gain control of that company. Generally-speaking, there are about 3 types of acquisitions that are most typical in the business realm, as business people like Robert F. Smith would likely know. One of the most common types of acquisition strategies in business is called a horizontal acquisition. So, what does this indicate? Basically, a horizontal acquisition entails one company acquiring a different business that is in the same market and is performing at a similar level. Both businesses are primarily part of the same market and are on a level playing field, whether that's in production, financing and business, or farming etc. Usually, they may even be considered 'rivals' with each other. Generally, the major advantage of a horizontal acquisition is the increased capacity of enhancing a business's client base and market share, in addition to opening-up the opportunity to help a firm enlarge its reach into new markets.
Many individuals assume that the acquisition process steps are always the same, whatever the business is. However, this is a common mistaken belief because there are actually over 3 types of acquisitions in business, all of which come with their very own procedures and approaches. As business individuals like Arvid Trolle would likely confirm, among the most frequently-seen acquisition methods is called 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. As an example, the acquirer business may be higher up on the supply chain but opt to acquire a business that is involved in a vital part of their business functions. On the whole, the beauty of vertical acquisitions is that they can bring in new earnings streams for the businesses, along with decrease costs of manufacturing and streamline operations.
Amongst the many types of acquisition strategies, there are two that people tend to confuse with each other, possibly as a result of the similar-sounding names. These are referred to as 'conglomerate' and 'congeneric' acquisitions, which are two rather distinct strategies. To put it simply, a conglomerate acquisition is when the acquirer and the target company are in entirely unrelated markets or engaged in separate ventures. There have been numerous successful acquisition examples in business that have involved 2 starkly different firms with no overlapping operations. Typically, the objective of this approach is diversification. As an example, in a scenario where one services or product is struggling in the current market, firms that also own a diverse range of other services and products tend to be much more stable. On the other hand, a congeneric acquisition is when the acquiring firm and the acquired business are part of a similar sector and sell to the same kind of client but have slightly different products or services. One of the major reasons why firms could opt to do this type of acquisition is to simply expand its line of product, as business individuals like Marc Rowan would likely verify.