When 2 companies undergo an acquisition, it is likely that they will do one of the following techniques
Lots of people presume that the acquisition process steps are constantly the same, whatever the company is. However, this is a frequent mistaken belief due to the fact that there are actually over 3 types of acquisitions in business, all of which come with their own procedures and approaches. As business individuals like Arvid Trolle would likely validate, among the most frequently-seen acquisition strategies is known as a vertical acquisition. Essentially, this acquisition is the polar opposite of a horizontal acquisition; it is where one firm acquires another firm that is in a completely different position on the supply chain. For instance, the acquirer business might be higher on the supply chain but opt to acquire a company that is involved in an essential part of their business procedures. Generally, the appeal of vertical acquisitions is that they can generate new earnings streams for the businesses, in addition to decrease prices of manufacturing and streamline operations.
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 company purchases either the majority, or all of another company's shares to gain control of that business. Generally-speaking, there are about 3 types of acquisitions that are most typical in the business industry, as business individuals like Robert F. Smith would likely recognize. Among the most typical types of acquisition strategies in business is referred to as a horizontal acquisition. So, what does this indicate? Basically, a horizontal acquisition involves one company acquiring an additional firm that is in the exact same market and is performing at a comparable level. The two companies are basically part of the same industry and are on a level playing field, whether that's in production, financing and business, or agriculture etc. Typically, they may even be considered 'competitors' with one another. On the whole, the major benefit of a horizontal acquisition is the increased capacity of enhancing a company's customer base and market share, along with opening-up the possibility to help a business grow its reach into new markets.
Among the countless types of acquisition strategies, there are 2 that people have a tendency to confuse with each other, perhaps due to the similar-sounding names. These are called 'conglomerate' and 'congeneric' acquisitions, which are 2 very separate strategies. To put it simply, a conglomerate acquisition is when the acquirer and the target firm are in totally unrelated industries or engaged in different endeavors. There have been several successful acquisition examples in business that have included two starkly different companies without any overlapping operations. Normally, the objective of this strategy is diversification. For example, in a scenario where one product and services is struggling in the current market, firms that also own a diverse variety of other products and services often tend to be a lot more stable. On the other hand, a congeneric acquisition is when the acquiring firm and the acquired business are part of a comparable industry and sell to the same sort of client but have slightly different service or products. One of the major reasons why firms might opt to do this type of acquisition is to simply increase its product lines, as business people like Marc Rowan would likely verify.