What Are Strategic Acquisitions?

Generally refers to business mergers and acquisitions for the purpose of industry integration and industrial chain integration in the process of business development in order to consider the strategic interests of the company's development, so as to achieve the goal of synergy and sustainable development

Strategic acquisition

strategy

At present, the industry of many domestic companies has developed to a certain scale. The cash flow of these companies can ensure the normal development of the existing industry, but based on the consideration of scale effect or the consideration of industrial synergy, there is a need for expansion. The demand for such expansion is the acquisition demand for companies in the same industry or upstream and downstream companies in the industry chain. Strategic acquisition is a strategic acquisition, which includes two types of industry integration and industry chain integration.

Industry integration refers to the purchaser's acquisition of enterprises in the same industry. This type of acquisition is usually based on the consideration of expanding market share and occupying the leading position in the market. A major feature of the domestic industrial market is that the market concentration is very low. The concentration of most industries has not reached 20%, and the expansion of market demand is in an increasing trend. This is in line with that of the United States 100 years ago. The industrial market is very similar. The biggest problems of low industry concentration are low industry entry barriers, disorderly markets, and poor competition methods. Due to the lack of industry leaders, "big brother" -level enterprises raise the industry threshold, maintain market order, and formulate industry rules It is very detrimental to the normal development of the entire industry. The first wave of mergers and acquisitions in the United States was based on this market background. The results of mergers and acquisitions have created global giants such as AT & T and Rockefeller. At present, many domestic companies' "race-seeking" acquisition behavior (such as the acquisition of Huayuan Group, TCL's external expansion) is a typical industry-integrated acquisition.

Industrial chain integration is based on the acquisition of upstream and downstream of the industrial chain based on reducing the operating cost of a single industry and increasing the company's resistance to industry system risks. The expansion strategy of Shanghai Sugar Tobacco Group is a typical integration of the industry chain. The company's strategy of up-controlled energy, centrally controlled logistics, and down-controlled network clearly reflects the expansion model of synergistic integration of different links in the entire industrial chain, reducing costs and increasing economies of scale. If the industry integration is point radiation, then the industrial chain integration is more like a chain radiation, and the scale effect is more obvious, but the characteristics of the system engineering of the acquisition are more obvious and more complicated. In the current domestic M & A market, industry integration or industry chain integration through the acquisition of listed companies has begun to emerge, and the continuous expansion of market demand in various industries will inevitably lead to a large number of similar acquisitions.