Types of Mergers

Give an elaborated overview of the different types of mergers.

They following are the different types of mergers

Conglomerate: When two companies which are in entirely different businesses merge, it is called as conglomerate. It is further classified as
Pure conglomerate: In this the two firms have nothing in common.
Mixed conglomerate: In this the two firms are looking for product or market extensions.
Horizontal merger: When two companies which are in the same industry merge, it is called as horizontal merger. It occurs between companies that are competitors in the same industry and are offering the same goods or services. This type of merger usually occurs in the industries where there are few competitors and the competition is high. When these industries merge they’ll have much bigger synergies and potential gains.
Market extension merger: This occurs between two firms that are offering the same products but in different market regions. The motive behind this type of merger is to make sure that the merging companies will be able to operate in a bigger market and there by getting huge number of clients.
Product extension merger: This type of merger occurs between two companies that offer the products that are related to each other and operating in the same market. The merger helps to group the products together and reach a huge client base. It increases the profit margins too.
Vertical merger: This occurs between two companies which are producing different goods or services for one specific finished product. It occurs when two or more firms that offer products which are part of an industry’s supply chain merge their operations. The purpose of merger is to increase synergies created by the merging entities and operate more efficiently as a single business unit.

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