Definition - What does Conglomerate Acquisition mean?
Divestopedia explains Conglomerate Acquisition
- Expanding into new markets
- Reducing unsystematic risks
- Eliminating redundant activities
- Attaining synergies
A minor firm could strengthen its competitive position by taking advantage of the retained earnings of the large firm. A clear advantage of a conglomerate merger is an exponential increase in reach and a spreading out of risk among more factors. The positive economic contributions of a conglomerate acquisition include invigorating lethargic and inefficient firms and more objective resource allocation decisions. These may, however, have an adverse psychological effect on competition.