Some successful acquisition examples to motivate CEOs

Some successful acquisition examples to motivate CEOs

Blog Article

Listed here are a number of business approaches relating to acquisitions

Before diving into the ins and outs of acquisition strategies, the 1st thing to do is have a solid 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 business's shares to gain control of that company. Generally-speaking, there are around 3 types of acquisitions that are most popular in the business industry, as business people like Robert F. Smith would likely recognize. Among the most frequent types of acquisition strategies in business is known as a horizontal acquisition. So, what does this mean? Basically, a horizontal acquisition involves one company acquiring another firm that is in the exact same market and is performing at a similar level. Both companies are basically part of the very same market and are on an equal playing field, whether that's in production, finance and business, or agriculture etc. Usually, they may even be considered 'competitors' with each other. In general, the major benefit of a horizontal acquisition is the increased potential of raising a business's customer base and market share, in addition to opening-up the opportunity to help a firm grow its reach into new markets.

Among the many types of acquisition strategies, there are 2 that people commonly tend to confuse with each other, maybe due to the similar-sounding names. These are called 'conglomerate' and 'congeneric' acquisitions, which are two rather separate strategies. To put it simply, a conglomerate acquisition is when the acquirer and the target firm are in completely unconnected industries or engaged in different activities. There have actually been numerous successful acquisition examples in business that have included two starkly different firms with no overlapping operations. Normally, the aim of this technique is diversification. For example, in a circumstance where one product or service is struggling in the current market, firms that also own a diverse variety of other services and products often tend to be much more secure. On the other hand, a congeneric acquisition is when the acquiring company and the acquired business belong to a similar sector and sell to the same type of client but have relatively different products or services. Among the major reasons why companies may opt to do this kind of acquisition is to simply broaden its line of product, as business people like Marc Rowan would likely verify.

Lots of people presume that the acquisition process steps are constantly the same, no matter what the business 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 operations and approaches. As business people like Arvid Trolle would likely verify, among the most frequently-seen acquisition methods is known as a vertical acquisition. Essentially, this acquisition is the polar opposite of a horizontal acquisition; it is where one business acquires another firm that is in an entirely different position on the supply chain. For instance, the acquirer firm might be higher up on the supply chain but decide to acquire a business that is involved in a crucial part of their business functions. Overall, the beauty of vertical acquisitions is that they can bring in new earnings streams for the businesses, along with decrease costs of production and streamline operations.