When two companies undergo an acquisition, it is likely that they will do one of the following approaches
Amongst the many types of acquisition strategies, there are 2 that individuals commonly tend to confuse with each other, probably as a result of the similar-sounding names. These are called 'conglomerate' and 'congeneric' acquisitions, which are 2 really distinct strategies. To put it simply, a conglomerate acquisition is when the acquirer and the target company are in completely unconnected sectors or engaged in different endeavors. There have actually been lots of successful acquisition examples in business that have involved two starkly different companies without any overlapping operations. Generally, the goal of this technique is diversification. For example, in a situation where one product or service is struggling in the current market, businesses that also possess a diverse variety of other services and products have a tendency to be much more steady. On the other hand, a congeneric acquisition is when the acquiring company and the acquired company belong to a comparable industry and sell to the same type of consumer but have relatively different products or services. One of the major reasons why firms might opt to do this type of acquisition is to simply broaden its product lines, as business individuals like Marc Rowan would likely verify.
Prior to diving right into the ins and outs of acquisition strategies, the first thing to do is have a solid 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 business's shares to gain control of that company. Generally-speaking, there are approximately 3 types of acquisitions that are most typical in the business realm, as business people like Robert F. Smith would likely recognize. Among the most frequent types of acquisition strategies in business is known as a horizontal acquisition. So, what does this suggest? Essentially, a horizontal acquisition involves one company acquiring an additional company that is in the very 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. In general, the major advantage of a horizontal acquisition is the increased possibility of boosting a company's client base and market share, as well as opening-up the chance to help a company widen its reach into new markets.
Lots of people assume that the acquisition process steps are constantly the same, no matter what the business is. Nonetheless, this is a frequent misconception since there are actually over 3 types of acquisitions in business, all of which feature their own operations and strategies. As business individuals like Arvid Trolle would likely validate, one of the most frequently-seen acquisition methods is known as 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 an entirely different position on the supply chain. For instance, the acquirer firm may be higher up on the supply chain but opt to acquire a company that is involved in a crucial part of their business functions. In general, the appeal of vertical acquisitions is that they can generate new earnings streams for the businesses, along with lower expenses of manufacturing and streamline operations.