When two businesses experience an acquisition, it is most likely that they will do one of the following approaches
Among the many types of acquisition strategies, there are 2 that people often tend to confuse with each other, probably due to the similar-sounding names. These are referred to as 'conglomerate' and 'congeneric' acquisitions, which are 2 very distinct strategies. To put it simply, a conglomerate acquisition is when the acquirer and the target firm are in entirely unrelated markets or engaged in different ventures. There have been numerous successful acquisition examples in business that have included 2 starkly different companies with no overlapping operations. Normally, the purpose of this strategy is diversification. For example, in a circumstance where one product and services is struggling in the current market, companies that also have a diverse variety of additional product or services tend to be more steady. On the other hand, a congeneric acquisition is when the acquiring business and the acquired firm belong to a comparable industry and sell to the same type of client but have relatively different service or products. Among the major reasons why companies might decide to do this kind of acquisition is to simply broaden its product lines, as business people like Marc Rowan would likely validate.
Many individuals think that the acquisition process steps are constantly the same, whatever the firm is. Nonetheless, this is a common misconception because there are actually over 3 types of acquisitions in business, all of which come with their own procedures and strategies. As business people like Arvid Trolle would likely confirm, one of the most frequently-seen acquisition strategies is called 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 completely different position on the supply chain. For example, the acquirer firm might be higher on the supply chain but opt to acquire a business that is involved in a crucial part of their business procedures. Generally, the appeal of vertical acquisitions is that they can bring in new income streams for the businesses, as well as lower costs 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 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 firm. Generally-speaking, there are approximately 3 types of acquisitions that are most typical in the business industry, as business people like Robert F. Smith would likely understand. One of the most common types of acquisition strategies in business is called a horizontal acquisition. So, what does this suggest? Basically, a horizontal acquisition involves one company acquiring another firm that is in the very same market and is performing at a comparable level. The two companies are primarily part of the very same market and are on an equal playing field, whether that's in production, financing and business, or agriculture etc. Frequently, they could even be considered 'rivals' with one another. Overall, the major benefit of a horizontal acquisition is the increased capacity of increasing a firm's client base and market share, as well as opening-up the possibility to help a business broaden its reach into new markets.