Acquisition strategy is the approach of acquiring products, services, and business by considering factors like brand, financial impact, culture, product etc. It plays a significant role in business expansion and plays part in growth of business.
The elements of an acquisition strategy are as follows −
The strategies of an acquisition strategy are as follows −
Adjacent industry − If a company sees an advantage/opportunity in an adjacent industry, it buys an adjacent industry by using its competitive strengths.
Diversification − To offset the risk in its own sector/business, a company may choose to diversify from its core area.
Full service − If a company wants to complete the service providers, then he will acquire the required product line companies to complete the cycle.
Geographical growth − If a company wants to expand in new areas, it will acquire the supported business that has geographical access.
Industry roll-up − To gain the market share, companies acquire small businesses.
Low cost − In this, acquirers will look for businesses which have an appreciable market share and products.
Market window − Company will look for the opportunities for its new product or service.
Product supplementation − One company will supplement another company, who are in similar products.
Sales growth − Company accelerates their growth rate through acquisitions.
Synergy − One acquires another company in a similar market but, an acquirer has more knowledge on doing the business.
Vertical integration − One company acquires another company (either raw material supplier or distributor of its products or may be both) to control products supply chain.