Mergers and acquisitions occur every day in the business world, especially in the world of small and medium-sized businesses. Most businesses aim to grow or divest at the expense of another or with their mutual support. To further our blog on “The Different Types of Mergers & Acquisitions,” see all of the following kinds of mergers and acquisitions:
Product Extension Mergers
A product extension merger occurs between two businesses that deal in related products and operate in the same market. This kind of merger enables the merging companies to group their products and gain access to a larger set of consumers.
A vertical merger is between two companies that produce different goods or services for one specific finished product. The two firms operating at different levels in an industry’s supply chain merge their operations. The goal is that the firms will be more efficient operating as one.
When one company takes control of another, it is considered an acquisition. The company that takes over purchases the assets or a majority of shares from the company being overtaken. The specific kinds of acquisitions include the following:
- Value creating – When one company acquires another, improves its performance, and then sells it again for a profit.
- Consolidating – Consolidating occurs when one company acquires another to remove its competition.
- Accelerating – Accelerating is when a larger company acquires a smaller one and uses its resources to accelerate market access for the smaller company’s products.
- Resource Acquiring – When a company acquires another to increase its resources, skills, intellectual property, technologies, or market positioning.
- Speculating – A larger company acquires a smaller company with a new product, to cash in on its future growth potential.
Contact ProGuide for information on mergers and acquisitions in Fort Lauderdale. We are here to help you reach your goals safely and securely.
Mergers and acquisitions are spurred by economic factors. The performance of the economy, which includes the growth in GDP, interest rates, and monetary policies play a significant role in the process of mergers or acquisitions between companies and organizations. The following types of business combinations are known as mergers: conglomerate merger, horizontal merger, market extension merger, vertical merger, and product extension merger. The term that describes the merger depends on its economic function, the purpose of the business transaction, and the relationship between the merging companies.
The two types of conglomerate are “pure” mergers and “mixed” mergers. Mergers between firms that are involved in unrelated businesses are known as pure conglomerate mergers. Mixed conglomerate mergers involve firms that are looking for product or market extensions.
A horizontal merger is a business consolidation between firms that operate in the same space, often as competitors offering the same good or service. Horizontal mergers are common in industries with fewer firms, as competition tends to be higher and potential gains in market share are greater for merging firms in such an industry.
Market Extension Mergers
A market extension merger takes place between two companies that offer the same products in separate markets. The market extension merger ensures that the merging companies get access to a bigger market with a larger customer base.
For more information, contact ProGuide, a company that has worked with clients on dozens of mergers and acquisitions in Fort Lauderdale and throughout the country, with transactions ranging from $20 million to nearly $3 billion.
In general, mergers and acquisitions are considered a general global trend associated with a global corporate restructuring across industries. A vital part of any healthy economy, they are essential to many companies that need to provide returns to their owners and investors. There are a number of misconceptions about international mergers and acquisitions, which are deals or transactions that may be vital to the growth of a company that aims to penetrate new markets. Some of the largest misconceptions about international mergers and acquisitions are:
Across the Border Transactions Are Not Worth It.
Many companies find it profitable to conduct cross-border transactions whether they are on the buying or selling side. Of course, any company has to have the vision and resources to complete these deals.
Foreign Buyers Always Pay More for an Acquisition.
While there are instances in which foreign buyers may pay more for an acquisition in a different country to buy their way into a market, that is not always the case.
International Transactions Take a Long Time.
Sometimes, due to the need to translate documents and obtain necessary approvals, international transactions may take extra time. However, extra steps like these should not add an inordinate amount of time.
Find out everything you need to know about mergers and acquisitions in Fort Lauderdale from the experts at ProGuide Management Resources.