In this article, we will talk about six types of successful business acquisitions, takeovers, and mergers, and all their advantages and disadvantages. You will also learn how this can help your pricing strategy.
First type – Vertical merger
The first of the merger and acquisition strategies is the acquisition or merger of two companies that operate in the same field of activity, but at different points in the production cycle. This type of acquisition is good for both companies because they both secure another very necessary step in the production process. An example of this would be a merger of an electronics retailer with an electronics manufacturer.
As part of that merger, the retailer will have a direct line of supply of the range of products it needs along with the supplier. The manufacturer, on the other hand, will now have a regular customer who will steadily buy up his goods.
Second type – Selling most of the assets
In the Sale of Most Assets, one organization buys out almost all of the assets of another. This method is a unique acquisition method and is not used as a merger. In the implementation of this transaction, most of the assets are transferred under the control of the company that acquired them, which puts them in a much more advantageous position.
The main advantage of the sale of assets will be the immediate growth of the company, which occurs in the shortest possible time.
Type three- Stocks for stocks
This method is a bit like the previous one, but they have one major difference. In this case, the business that is bought becomes a subsidiary of the buyer, instead of being completely controlled by him. The benefit of buying stocks is to avoid complete failure due to mismanagement of the newly acquired business and to maintain your profit potential.
Type Four – Horizontal Fusion
The principle of this method is the merger of two competing companies, or the acquisition of a third by them, which works in the same direction. This method is aimed at the rapid growth of the enterprise while at the same time removing a powerful competitor from the market.
A horizontal merger has a positive effect on both companies, leading them to exponential growth due to the growth of assets, as well as x market share.
Type Five – Concentric Fusion
This is a type of merger in which companies operating in the same field do not compete with each other. The peculiarity of this method is to expand their client base by offering a wider assortment. For example, a camera company merges with a company that makes camera bags.
Type Six – Merger of Conglomerates
A merger of conglomerates is a merger of enterprises that operate in different fields. The main idea behind the merger is to help both companies expand their industries. This method does not ensure the rapid growth of enterprises, but after a while, due to the introduction of other products into its range, this can lead to great profitability.