What are the Different Types of Acquisition Strategy?

An acquisition strategy is a plan or approach used in securing ownership of a business. The exact nature of that strategy will vary, based on the circumstances that surround the process of gaining ownership of that company. In some cases, the acquisition is a simple process that moves forward with the enthusiastic support of all parties concerned. At other times, the acquisition is more along the lines of a takeover that occurs without the willing participation of the company owners.

One example of an acquisition strategy is a straight buyout. With this approach, company A wishes to buy company B. Company B is open to the idea of selling and is willing to entertain an offer from company A. Assuming that the offer is lucrative enough for the owners of the selling company, there is a good chance that the two businesses will begin negotiations to structure the acquisition. This often includes determining what to do when both businesses have operations in the same general location, how to manage the workforce of both companies to best advantage, and what types of benefits will be granted to displaced employees. Terms of payment, possibly in the form of stocks in the buying company as well as some cash, are also established.

Not every acquisition strategy involves the willing participation of the business targeted by the buyer. The process may involve what is known as a company takeover. This is often accomplished by acquiring enough shares of the targeted company’s stocks to force a sale. With a hostile takeover attempt, owners may have limited options in fighting off the acquisition strategy and ultimately have no choice but to sell. Since this approach can require expending more time and financial resources than other methods, the corporation attempting the takeover must determine if the returns generated by the acquisition are worth the expense of acquiring ownership in the first place.

While there are differences between mergers and acquisitions, the lines are sometimes blurred when it comes to one company buying out another company. A true merger involves the union of two companies into one new company. An acquisition strategy that is somewhat similar involves the purchase of one company by another, then the systematic absorption of the acquired company into the overall structure of the new parent. This approach usually does not result in the creation of a new entity, although the buyer may choose to continue operating the acquired company as a wholly owned subsidiary rather than integrating the purchased business into the main operation.