Checking out the examples of acquisitions that succeeded

Checking out the examples of acquisitions that succeeded

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Firm acquisitions can be a complex procedure; here are the various strategies that business leaders employ

Many individuals assume that the acquisition process steps are constantly the same, no matter what the firm is. However, this is a normal mistaken belief because there are actually over 3 types of acquisitions in business, all of which come with their very own operations and approaches. As business people 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 company acquires another business that is in an entirely different position on the supply chain. As an example, the acquirer company might be higher on the supply chain but decide to acquire a firm that is involved in a key part of their business procedures. Overall, the beauty of vertical acquisitions is that they can generate new earnings 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 people commonly tend to confuse with each other, possibly because of the similar-sounding names. These are called 'conglomerate' and 'congeneric' acquisitions, which are two really independent strategies. To put it simply, a conglomerate acquisition is when the acquirer and the target company are in totally unconnected industries or engaged in separate endeavors. There have actually been many successful acquisition examples in business that have involved 2 starkly different businesses with no overlapping operations. Normally, the purpose of this strategy is diversification. For instance, in a circumstance where one service 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 sort 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 company 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 industry, as business individuals like Robert F. Smith would likely recognize. Among the most standard types of acquisition strategies in business is known as a horizontal acquisition. So, what does this mean? Essentially, a horizontal acquisition involves one company acquiring another company that is in the same market and is performing at a similar level. The two companies are basically part of the same industry and are on an equal playing field, whether that's in manufacturing, financing and business, or farming etc. Commonly, they could even be considered 'rivals' with each other. Generally, the primary advantage of a horizontal acquisition is the increased capacity of enhancing a business's customer base and market share, as well as opening-up the opportunity to help a company expand its reach into brand-new markets.