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

Prior to diving right into the ins and outs of acquisition strategies, the very first 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 company's shares to gain control of that business. Generally-speaking, there are approximately 3 types of acquisitions that are most typical in the business sector, as business people like Robert F. Smith would likely understand. Among the most typical types of acquisition strategies in business is called a horizontal acquisition. So, what does this mean? Essentially, a horizontal acquisition entails one company acquiring a different company that is in the exact same market and is performing at a comparable level. The two firms are primarily part of the same market and are on a level playing field, whether that's in production, finance and business, or agriculture etc. Commonly, they could even be considered 'competitors' with one another. On the whole, the main advantage of a horizontal acquisition is the increased capacity of raising a company's client base and market share, in addition to opening-up the possibility to help a company grow its reach into brand-new markets.

Many individuals assume that the acquisition process steps are always the same, regardless of what the business is. Nonetheless, this is a common 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 a completely different position on the supply chain. For example, the acquirer company 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.

Amongst the many types of acquisition strategies, there are two that people often tend to confuse with each other, maybe because of the similar-sounding names. These are referred to as 'conglomerate' and 'congeneric' acquisitions, which are 2 really distinct strategies. To put it simply, a conglomerate acquisition is when the acquirer and the target company are in totally unassociated markets or engaged in separate activities. There have been many successful acquisition examples in business that have involved two starkly different businesses without any overlapping operations. Generally, the purpose of this approach is diversification. As an example, in a circumstance where one product and services is struggling in the current market, businesses that also have a diverse variety of other products and services tend to be more secure. On the other hand, a congeneric acquisition is when the acquiring company and the acquired firm belong to a comparable market and sell to the same type of customer but have relatively different service or products. Among the primary reasons why companies might opt to do this sort of acquisition is to simply broaden its product lines, as business people like Marc Rowan would likely validate.