Understanding Different Types of Acquisitions

Acquisitions are categorized based on how they integrate with the buying company's existing business. Here are the four main types:

1. Vertical Acquisition

In a vertical acquisition, a company acquires another company within its supply chain. Examples include a car manufacturer buying a tire supplier (upstream) or a brewery purchasing bars (downstream).

2. Horizontal Acquisition

A horizontal acquisition occurs when a company buys a competitor within the same industry, like a mobile phone company acquiring another mobile phone firm.

3. Conglomerate Acquisition

This type of acquisition involves a company buying another company in a completely different industry, such as a food company purchasing a bicycle manufacturer.

4. Congeneric Acquisition

Also known as market expansion, this happens when a company acquires another that is in a related industry but with different products, like a TV manufacturer buying a remote control company.