Acquisition is the process of acquiring one or more companies by acquirer without affecting the acquirer brand name or autonomy. The targeted company or companies will exist and continue their operations but they have to work under acquirer name and their terms. This ownership change takes place.
The main objective of acquisition is to improve present performances, decrease the competition in the market, to gain technology and expertise and economic scale.
The purpose and classification is based on involved companies and reasons may not be the same because companies at times don’t make them public due to different reasons.
There are different types of acquisitions and the type chosen according to their business needs. These types of acquisitions are explained below −
Horizontal acquisition − If one company acquires, another company in the same industry or business line or their competitor is called horizontal acquisition.
Vertical acquisition − If one company acquires another company, who are the suppliers or distributors of their products is called vertical acquisition.
Conglomerate acquisition − If one company acquires another company in a different sector or in different industry to diversify (to explore different sectors) is called conglomerate acquisition.
Congeneric acquisition − If one company acquires another company who are having similar technology, distribution line or similar production is called congeneric acquisition.
The advantages of acquisition are as follows −
The disadvantages of acquisition are as follows −