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Five Mergers: One for Every Need

Five Mergers: One for Every Need

 

Photo Credit: o5com

Mergers are common within the business world. A merger is typically known as a combining of two businesses into one larger or more powerful organization, but did you know that there are multiple types of mergers that fit various companies according to factors like market share and audience size?

There are five common forms of mergers:

Conglomerate Merger: A conglomerate merger occurs between companies that participate in completely different activities. There are two different types of conglomerate mergers; pure and mixed. Pure conglomerate mergers occur with companies who share absolutely no commonalities while a mixed conglomerate merger usually involves firms of companies looking for product and market extension.

Horizontal Merger: Horizontal mergers often occur between companies within the same industry. Consolidation of business happens between two groups that are operating in the same market and are usually competitors. Horizontal mergers often occur when a merger provides higher potential gains in market share. The goal of horizontal mergers is to create a larger organization with a larger total market share.

Market Extension Merger: Market extension mergers involve two companies that deal in similar products but in different markets. This type of merger is meant to gain access to a larger market and an increased audience size.

Product Extension Merger: Product extension mergers occur with two companies that have related products within the same market. A merger of this sort will often occur when there is an opportunity for greater market and demographic exposure if the companies become one cohesive unit and/or product.

Vertical Merger: Vertical mergers happen between two companies that exist in the same market or supply chain but are not direct competitors. These types of mergers are done to increase synergies and create a more efficient and effective method of doing business. A good example of vertical merging would be a baseball bat company merging with a wood company.

As you can see, there are multiple opportunities in the realm of mergers. We hope that this quick synopsis has broadened your understanding of the concept. If you or your company are looking to get involved in a merger, consider getting in contact with Stock Connections; we specialize in mergers and acquisitions and can assure that our service will be quality and our knowledge will be impeccable.

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