A basic acquisition strategy example in the business industry

A basic acquisition strategy example in the business industry

Blog Article

Business acquisitions can be a complicated procedure; here are the various strategies that business leaders employ

Many people presume that the acquisition process steps are always the same, regardless of what the company is. Nonetheless, this is a typical false impression since there are actually over 3 types of acquisitions in business, all of which feature their own procedures and approaches. As business people like Arvid Trolle would likely validate, one of the most frequently-seen acquisition methods is referred to as a vertical acquisition. Essentially, this acquisition is the polar opposite of a horizontal acquisition; it is where one company acquires another business that is in a completely different position on the supply chain. As an example, the acquirer company might be higher up on the supply chain but decide to acquire a firm that is involved in an essential part of their business functions. Overall, the appeal of vertical acquisitions is that they can generate new revenue streams for the businesses, as well as lower prices of production and streamline operations.

Amongst the countless types of acquisition strategies, there are two that individuals tend to confuse with each other, possibly as a result of the similar-sounding names. These are known as 'conglomerate' and 'congeneric' acquisitions, which are two rather separate strategies. To put it simply, a conglomerate acquisition is when the acquirer and the target company are in entirely unrelated markets or engaged in different ventures. There have been lots of successful acquisition examples in business that have included two starkly different firms without any overlapping operations. Generally, the aim of this technique is diversification. As an example, in a situation where one services or product is struggling in the current market, businesses that also own a diverse range of additional product or services tend to be much more steady. On the other hand, a congeneric acquisition is when the acquiring firm and the acquired firm are part of a similar market and sell to the same kind of consumer but have relatively different products or services. One of the primary reasons why firms could opt to do this kind of acquisition is to simply expand its product lines, as business people like Marc Rowan would likely validate.

Prior to diving right into the ins and outs of acquisition strategies, the first thing to do is have a firm understanding on what an acquisition actually is. Not to be confused with a merger, an acquisition is when one business purchases either the majority, or all of another business's shares to gain control of that business. Generally-speaking, there are about 3 types of acquisitions that are most popular in the business sector, as business individuals like Robert F. Smith would likely recognize. Among the most common types of acquisition strategies in business is known as a horizontal acquisition. So, what does this imply? Essentially, a horizontal acquisition involves one company acquiring an additional business that is in the exact same market and is performing at a similar level. The two firms are essentially part of the exact same market and are on an equal playing field, whether that's in manufacturing, finance and business, or agriculture etc. Frequently, they could even be considered 'rivals' with each other. Generally, the primary benefit of a horizontal acquisition is the increased capacity of enhancing a business's client base and market share, as well as opening-up the opportunity to help a company broaden its reach into new markets.