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.