When 2 companies go through an acquisition, it is very likely that they will do one of the following strategies
Among the countless types of acquisition strategies, there are two that people commonly tend to confuse with each other, perhaps because of the similar-sounding names. These are called '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 industries or engaged in separate ventures. There have actually been many successful acquisition examples in business that have involved two starkly different firms without any overlapping operations. Typically, the objective of this approach is diversification. As an example, in a situation where one services or product is struggling in the current market, firms that also possess a diverse range of other services and products often tend to be far more stable. On the other hand, a congeneric acquisition is when the acquiring company and the acquired company are part of a similar market and sell to the same kind of consumer but have relatively different service or products. One of the main reasons why companies might decide to do this type of acquisition is to simply broaden its product lines, as business individuals 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 normal misconception because there are actually over 3 types of acquisitions in business, all of which come with their very own operations and approaches. As business individuals like Arvid Trolle would likely validate, among the most frequently-seen acquisition methods is referred to as a vertical acquisition. Basically, 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 crucial part of their business procedures. Generally, the beauty of vertical acquisitions is that they can bring in new revenue streams for the businesses, along with decrease expenses of production and streamline operations.
Before diving into the ins and outs of acquisition strategies, the 1st 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 business purchases either the majority, or all of another company'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 know. Among the most standard types of acquisition strategies in business is called a horizontal acquisition. So, what does this indicate? Essentially, a horizontal acquisition involves one company acquiring a different business that is in the exact same market and is performing at a similar level. Both firms are essentially part of the same sector and are on a level playing field, whether that's in manufacturing, finance and business, or farming etc. Typically, they might even be considered 'rivals' with each other. In general, the main benefit of a horizontal acquisition is the increased capacity of enhancing a firm's client base and market share, in addition to opening-up the opportunity to help a firm grow its reach into new markets.