Some successful acquisition examples to motivate CEOs

Some successful acquisition examples to motivate CEOs

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Below is a short guide to knowing the different acquisition options and approaches that business leaders can pick from

Many people presume that the acquisition process steps are always the same, whatever the business is. However, this is a normal false impression since there are actually over 3 types of acquisitions in business, all of which come with their very own procedures and approaches. As business people like Arvid Trolle would likely validate, one of the most frequently-seen acquisition methods is referred to as a vertical acquisition. Essentially, this acquisition is the polar opposite of a horizontal acquisition; it is where one firm acquires another business that is in a completely different position on the supply chain. As an example, the acquirer firm may be higher on the supply chain but decide to acquire a business that is involved in a key part of their business procedures. Overall, the beauty of vertical acquisitions is that they can generate new revenue streams for the businesses, in addition to decrease expenses of manufacturing and streamline operations.

Among the countless types of acquisition strategies, there are two that individuals usually tend to confuse with each other, possibly as a result 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 firm are in totally unconnected markets or engaged in different activities. There have actually been many successful acquisition examples in business that have included two starkly different firms without any overlapping operations. Usually, the purpose of this strategy is diversification. For instance, in a scenario where one product or service is struggling in the current market, businesses that also own a diverse range of additional products and services have a tendency to be a lot more secure. On the other hand, a congeneric acquisition is when the acquiring company and the acquired business belong to a comparable market and sell to the same kind of consumer but have slightly different services or products. Among the major reasons why businesses might decide to do this type of acquisition is to simply increase its line of product, as business people like Marc Rowan would likely validate.

Before diving right into the ins and outs of acquisition strategies, the first thing to do is have a firm understanding on what an acquisition truly is. Not to be confused 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 people like Robert F. Smith would likely understand. Among the most standard types of acquisition strategies in business is known as a horizontal acquisition. So, what does this indicate? Basically, a horizontal acquisition entails one company acquiring a different company that is in the same market and is performing at a similar level. The two firms are generally part of the very same sector and are on a level playing field, whether that's in production, finance and business, or agriculture etc. Typically, they may even be considered 'rivals' with each other. Generally, the major benefit of a horizontal acquisition is the increased capacity of boosting a business's client base and market share, in addition to opening-up the chance to help a business grow its reach into new markets.