A merger happens when two or more companies agree to come together and form a new single entity.
It’s usually mutual and done to increase market share, reduce costs, or expand operations.
Types Of Merges
Vertical Merge
Horizontal Merge
Conglomerate Merge
Vertical Merge
Vertical merge is a merge of companies in the same industry at the same level of production
Pepsi merging with Coca-Cola (both make soft drinks).
Reduce competition, gain market share.
They are called vertical merge because vertical merge is considered as a economic understanding of people
Horizontal Merge
A merger between companies at different stages of production in the same industry.
Example -: A car manufacturer merging with a tire company.
Improve supply chain, reduce production costs.
Conglomerate Merge
A merger between companies in unrelated businesses.
A food company merging with a software company.
Diversification, reduce business risk.
How do mergers affect firm performance in the long run?
What are the strategic motivations behind mergers and acquisitions?
How does firm size influence the likelihood of engaging in mergers?
What role does corporate governance play in merger decisions?
How do mergers impact productivity and innovation within firms?
keywords
Mergers and Acquisitions (M&A)
Firm Strategy
Organic Growth vs. Mergers
Post-Merger Integration
Corporate Governance
Shareholder Value
Market Power
Economies of Scale
Synergies
Innovation and R&D
Horizontal and Vertical Mergers
Financial Structure
Industry Concentration
Competitive Advantage
Cultural Fit
Managerial Incentives
Transaction Costs
Antitrust Policy
Investment Banking
Strategic Alliances