Business acquisition and merger associates have the merger and acquisition analyst team that work together to provide business with the right guidance regarding the growth and expansion of a company.
Types of business acquisitions and mergers
There are various types of mergers and acquisitions, and selecting the right type of merger will depend on your goals and merger and acquisition strategy.
1. Horizontal Merger
This is often called horizontal acquisition. In this, two companies in the same market that sell similar products or services come together to dominate the market share. Here, there should be the execution of regulatory due diligence with special care. Horizontal merger helps to decrease market competition and promote market share.
An example of a horizontal merger: Exxon and Mobil both combined to form ExxonMobil - one of the world's largest publicly traded international oil and gas companies. , setting. This is the world's premier petroleum and chemical manufacturing company.
2. Vertical Merger
In this type of merging, there is an involvement of two companies in the same industry with different production. Here, a retailer merges with a wholesaler, or a wholesaler merges with a manufacturer. This can boost efficiency but can also reduce flexibility. This merging helps in the creation of new efficiencies by integration with suppliers/wholesalers.
An example of a vertical merger: In 2012, Iceland Foods (UK's frozen food supermarket chain) acquired Loxton Foods (food products supplier).
3. Congeneric Merger
This merger is also known as a concentric merger. In this type of merging, two companies have different products, but their operation is in the same market and sell the products to the same customers. This type of merging can help new companies in their expansion.
An example of a congeneric/concentric merger: The merging between mining firm Xstrata (a major producer of coal) and commodities trader Glencore (they produce metals and minerals like copper, zinc, etc.).
4. Market-extension and product-extension mergers
If two companies in the same industry merge to expand the market, it is known as market-extension and product-extension merging. This type of merger occurs across multiple geographic regions.
An example of market-extension and product-extension mergers: Recently, in 2022, two innovative shipbuilders, Wight Shipyard (a high-speed aluminum and craft shipbuilder) from the UK, and OCEA (they specialize in designing, and building the aluminum vessels of shipbuilding) from France, merged to extend their market size.
5. Conglomerate Merger
In this type, there is a merging of completely different and unrelated companies whose business activities are also unrelated. This type of merging helps in increasing market share and in diversification.
An example of a conglomerate merger: Pepsico's acquisition of Burger King, Pizza Hut.
6. Reverse Takeover
This is also known as Special Purpose Acquisition. Here, a private company acquires a public company. There can also be a reverse deal in which a public company can acquire a private company.
An example of this merger is the acquisition of US Airways by America West.
This type of merger is mostly in the technology sector because big tech companies can anyhow get their hands on value-adding talent.
An example would be Facebook's acquisition of Drop.io to bring Drop.io CEO Sam Lessin to the Facebook roster.
Business acquisition and merging not just mean one company buying another company. It is clear that there can be many forms that help you to set your company's long-term goals.