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

Prior to diving into the ins and outs of acquisition strategies, the 1st thing to do is have a firm 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 firm's shares to gain control of that company. Generally-speaking, there are about 3 types of acquisitions that are most popular in the business world, as business individuals like Robert F. Smith would likely recognize. One of the most prevalent types of acquisition strategies in business is known as a horizontal acquisition. So, what does this imply? Basically, a horizontal acquisition involves one company acquiring an additional firm that is in the same market and is performing at a comparable level. Both companies are essentially part of the very same industry and are on an equal playing field, whether that's in production, financing and business, or agriculture etc. Typically, they could even be considered 'rivals' with one another. Generally, the major benefit of a horizontal acquisition is the increased potential of boosting a firm's consumer base and market share, as well as opening-up the chance to help a business enlarge its reach into new markets.

Lots of people presume that the acquisition process steps are constantly the same, whatever the company is. However, this is a standard false impression because there are actually over 3 types of acquisitions in business, all of which come with their own operations and approaches. As business individuals like Arvid Trolle would likely validate, among the most frequently-seen acquisition methods is called a vertical acquisition. Essentially, this acquisition is the polar opposite of a horizontal acquisition; it is where one company acquires another company that is in a totally different position on the supply chain. For instance, the acquirer firm may be higher up on the supply chain but decide to acquire a business that is involved in a crucial part of their business procedures. 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.

Among the many types of acquisition strategies, there are two that people have a tendency to confuse with each other, possibly because of the similar-sounding names. These are referred to as 'conglomerate' and 'congeneric' acquisitions, which are two very separate strategies. To put it simply, a conglomerate acquisition is when the acquirer and the target company are in completely unrelated industries or engaged in separate activities. There have been many successful acquisition examples in business that have involved two starkly different companies with no overlapping operations. Typically, the objective of this technique is diversification. For instance, in a situation where one service or product is struggling in the current market, firms that also have a diverse range of other products and services tend to be far more secure. On the other hand, a congeneric acquisition is when the acquiring firm and the acquired business are part of a similar industry and sell to the same sort of consumer but have relatively different services or products. Among the major reasons why firms may decide to do this sort of acquisition is to simply increase its line of product, as business people like Marc Rowan would likely verify.