When two companies undergo an acquisition, it is likely that they will do one of the following approaches

Many individuals think that the acquisition process steps are always the same, regardless of what the firm is. Nonetheless, this is a typical 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 referred to as a vertical acquisition. Basically, 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 example, the acquirer business may be higher up on the supply chain but decide to acquire a business that is involved in a crucial part of their business functions. On the whole, the appeal of vertical acquisitions is that they can generate brand-new revenue streams for the businesses, along with decrease prices of manufacturing and streamline operations.

Prior to diving right 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 business's shares to gain control of that business. Generally-speaking, there are about 3 types of acquisitions that are most typical in the business realm, as business people like Robert F. Smith would likely know. One of the most typical types of acquisition strategies in business is known as a horizontal acquisition. So, what does this mean? Essentially, a horizontal acquisition entails one company acquiring a different firm that is in the exact same market and is performing at a similar level. The two businesses are primarily part of the very same market and are on an equal playing field, whether that's in manufacturing, financing and business, or farming etc. Commonly, they may even be considered 'competitors' with each other. On the whole, the primary advantage of a horizontal acquisition is the increased potential of raising a business's client base and market share, as well as opening-up the possibility to help a business grow its reach into new markets.

Among the numerous types of acquisition strategies, there are two that individuals commonly tend to confuse with each other, maybe because of the similar-sounding names. These are called 'conglomerate' and 'congeneric' acquisitions, which are 2 very independent strategies. To put it simply, a conglomerate acquisition is when the acquirer and the target company are in completely unconnected industries or engaged in different endeavors. There have actually been lots of successful acquisition examples in business that have involved 2 starkly different companies without any overlapping operations. Typically, the purpose of this technique is diversification. For example, in a circumstance where one services or product is struggling in the current market, businesses that also have a diverse variety of other product or services tend to be far more stable. On the other hand, a congeneric acquisition is when the acquiring firm and the acquired company belong to a comparable market and sell to the same type of client but have relatively different services or products. Among the main reasons why firms could decide to do this type of acquisition is to simply increase its product lines, as business individuals like Marc Rowan would likely confirm.