Some successful acquisition examples to motivate CEOs

Some successful acquisition examples to motivate CEOs

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Company acquisitions can be a challenging process; right here are the different techniques that business leaders use

Many individuals assume that the acquisition process steps are always the same, regardless of what the business is. Nonetheless, this is a normal misconception due to the fact that there are actually over 3 types of acquisitions in business, all of which feature their very own procedures and strategies. As business people like Arvid Trolle would likely verify, 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 a completely 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 functions. Overall, 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 very 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 company's shares to gain control of that company. 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 understand. One of the most frequent types of acquisition strategies in business is referred to as a horizontal acquisition. So, what does this indicate? Essentially, a horizontal acquisition involves one company acquiring an additional business that is in the exact same market and is performing at a similar level. The two companies are primarily part of the very same sector and are on a level playing field, whether that's in manufacturing, finance and business, or agriculture etc. Often, they could even be considered 'rivals' with each other. In general, the main advantage of a horizontal acquisition is the increased possibility of raising a business's client base and market share, as well as opening-up the opportunity to help a firm widen its reach into brand-new markets.

Amongst the many types of acquisition strategies, there are 2 that individuals often tend to confuse with each other, possibly due to the similar-sounding names. These are called 'conglomerate' and 'congeneric' acquisitions, which are 2 very separate strategies. To put it simply, a conglomerate acquisition is when the acquirer and the target firm are in totally unrelated sectors or engaged in different activities. There have been several successful acquisition examples in business that have involved two starkly different businesses with no overlapping operations. Usually, the purpose of this approach is diversification. For instance, in a situation where one product or service is struggling in the current market, businesses 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 decide to do this sort of acquisition is to simply broaden its line of product, as business people like Marc Rowan would likely validate.