What is an acquisition strategy and explain its types and elements?

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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 −

  • Business strategy − Talks about contracting approach (type of contracts, leasing arrangements etc.)
  • Contracting strategy − Provides analysis and rationale.
  • Major contracts − Identification of contracts and its types.
  • Incentivise − Tells about incentives in detail.
  • Technical data management − Long term technical data needs are assessed.
  • Sustainment − Tells about acquiring integrated product support.


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.

Updated on 17-Jul-2021 16:02:26