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What are some of the different types of mergers?

There are many different ways in which your Florida company can join together with another business to create an entirely new organization. According to The Street, the potential benefits of a merger include further market penetration, sales growth and cost-cutting.

The objective you want to accomplish by joining with another company determines which type of merger you choose. Your options include the following.

Conglomerate merger

While most mergers involve companies that provide similar goods and services, a conglomerate merger occurs between two companies involved in entirely different industries. You may be able to reach different markets through a conglomerate merger.

Concentric merger

A concentric merger occurs between companies that provide products that are complementary to one another in some way and serve the same customer base. The two companies were not in competition to begin due to a difference in the goods they offer.

Vertical merger

A vertical merger includes two companies at different points in the supply chain but within the same industry. It allows companies to cut down on expenses and streamline operations by maintaining a steady supply flow. 

Horizontal merger

A horizontal merger makes partners out of one-time competitors. The two companies are in the same industry and provide similar products and services, often to the same consumer base. As a result of the merger, the two companies are no longer in direct competition with one another. An additional benefit of a horizontal merger is a decrease in production costs. 

The information in this article is not intended as legal advice but provided for educational purposes only.

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