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Mergers And Acquisitions

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Running head: MERGERS AND ACQUISITIONS 1
Mergers and Acquisitions
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MERGERS AND ACQUSITIONS 2
Mergers and Acquisitions
Introduction
Mergers and acquisition is a general term which refers to a form of business
combination or consolidation of companies assets. It can include different transactions such
as tender offers, acquisitions, mergers, management acquisitions, purchase of assets and
consolidations. There are five major types of business mergers and acquisitions which
include conglomerate merger, vertical merger, horizontal merger, product extension merger
and market extension merger. This paper will define each type of a merger in details and give
examples in each type. The different definitions of each type are based on the purpose of the
business transaction, the relationship between the merging companies and the purpose of the
economic function.
Conglomerate
Conglomerate involves a merger between enterprises that operate in different
industries with entirely different business activities in disregard of their stages of production
(Amihud, & Lev, 1981).The purpose of this type is mitigating risks by diversifying into other
industries. An example of a conglomerate merger would involve a combination of a
manufacturer of athletic shoes with a soft drink company. The merger between the American
Broadcasting Company and Walt Disney Company is a good example of a merger.
Conglomerate mergers can be pure or mixed. Pure conglomerate mergers involve companies
which have nothing in common while mixed conglomerate mergers involve enterprises that
aim at extending their markets or products.
Horizontal merger
A horizontal merger occurs when two companies in the same industry combine. The
two companies usually operate in the same space as competitors offering same products and
services. This type of a merger is common in an industry where there are few firms and is

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Running head: MERGERS AND ACQUISITIONS Mergers and Acquisitions Name Institution 1 MERGERS AND ACQUSITIONS 2 Mergers and Acquisitions Introduction Mergers and acquisition is a general term which refers to a form of business combination or consolidation of companies assets. It can include different transactions such as tender offers, acquisitions, mergers, management acquisitions, purchase of assets and consolidations. There are five major types of business mergers and acquisitions which include conglomerate merger, vertical merger, horizontal merger, product extension merger and market extension merger. This paper will define each type of a merger in details and give examples in each type. The different definitions of each type are based on the purpose of the business transaction, the relationship between the merging companies and the purpose of the economic function. Conglomerate Conglomerate involves a merger between enterprises that operate in different industries with entirely different business activities in disregard of their stages of production (Amihud, & Lev, 1981).The purpose of this type is mitigating risks by diversifying into other industries. An example of a conglomerate merger would involve a combination of a manufacturer of athletic shoes with a soft drink company. The merger between the American Broadcasting Company and Walt Disney Company is a good example of a merger. Conglomerate mergers can be pure or mixed. Pure conglomerate mergers involve compani ...
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