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What kinds of Mergers and Acquisitions are there?
Home » Accounting » Merger and Acquisitions » What kinds of Mergers and Acquisitions are there?There are three main types of mergers and acquisitions that can take place between businesses. The type of merger for a business to select depends greatly upon what situation the business finds itself in and what steps the business would like to make in the future.
A horizontal merger occurs when two competing businesses (business that theoretically or literally compete for the same market space, i.e. what service they provide or what products they provide) combine. Thus, horizontal mergers reduce competition.
Vertical mergers occur when two somewhat similar businesses combine to better complete the process of production (an example of this would is when a supplier and a manufacturer unite; two different links in the chain of commerce join). Vertical mergers can result in the eventual emergence of a mega-business, in which every step of production occurs under one banner.
Lastly, differing or other mergers are usually selected when two businesses have very different types of operation or production and are utterly unrelated to the other decide to combine.
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