A couple of successful acquisition examples to inspire chief executive officers

A couple of successful acquisition examples to inspire chief executive officers

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

Many people assume that the acquisition process steps are always the same, regardless of what the firm is. Nonetheless, this is a typical misunderstanding since there are actually over 3 types of acquisitions in business, all of which feature their very own operations and strategies. As business people like Arvid Trolle would likely confirm, one of the most frequently-seen acquisition techniques 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 an entirely different place on the supply chain. For example, the acquirer company may be higher up on the supply chain but decide to acquire a company that is involved in a key part of their business operations. In general, the beauty of vertical acquisitions is that they can bring in new income streams for the businesses, as well as lower costs of production and streamline operations.

Before diving 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 firm purchases either the majority, or all of another firm's shares to gain control of that firm. Generally-speaking, there are approximately 3 types of acquisitions that are most popular in the business sector, as business individuals like Robert F. Smith would likely recognize. Among the most prevalent types of acquisition strategies in business is called a horizontal acquisition. So, what does this indicate? Basically, a horizontal acquisition involves one company acquiring another company that is in the same market and is performing at a comparable level. Both businesses are primarily part of the exact same market and are on an equal playing field, whether that's in manufacturing, finance and business, or farming etc. Usually, they could even be considered 'rivals' with one another. In general, the main benefit of a horizontal acquisition is the increased possibility of raising a company's consumer base and market share, along with opening-up the chance to help a business broaden its reach into brand-new markets.

Among the several types of acquisition strategies, there are two that people commonly tend to confuse with each other, probably because of the similar-sounding names. These are referred to as 'conglomerate' and 'congeneric' acquisitions, which are two rather distinct strategies. To put it simply, a conglomerate acquisition is when the acquirer and the target company are in completely unconnected markets or engaged in separate ventures. There have actually been lots of successful acquisition examples in business that have involved 2 starkly different firms with no overlapping operations. Generally, the goal of this technique is diversification. For example, in a scenario where one service or product is struggling in the current market, companies that also possess a diverse variety of other product or services have a tendency to be more secure. On the other hand, a congeneric acquisition is when the acquiring business and the acquired company belong to a similar sector and sell to the same kind of customer but have relatively different services or products. Among the primary reasons why companies may opt to do this type of acquisition is to simply expand its line of product, as business people like Marc Rowan would likely confirm.