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M&A Strategy

Acquirer's M&A Strategy

The company's management must determine its acquisition strategy, which needs to be part of the broader strategy discussions of the company. Such strategy typically considers the following topics, each one of them discussed in previous chapters of this book, or in this chapter: horizontal (purchasing companies operating in the same industry) versus vertical (purchasing companies with an intimate supplier-buyer relationship) acquisitions; acquisitions for the purpose of cooperating in production or management procedures versus acquisitions which do not utilize joint resources; and acquisitions of competitors versus cooperation with competitors.

Once the acquisition strategy is developed, the company builds a mechanism for screening acquisition or merger candidates. Such a mechanism may be based on a continuous examination of potential companies or, alternatively, on an examination of candidates which approach the company. Either way, management must understand the advantages and disadvantages of each company considered for an acquisition or a merger. For example, it must assess, as objectively as possible, what human and economic resources are available to the target, and its situation in areas such as business development, marketing, production, research, and finance.


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