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Acquisition and Mergers

These are used to describe consolidation of companies or assets through various types of financial transactions including: - Acquisitions - Mergers - Consolidations - Tender offers - Purchase of assets - Management Acquisitions

Bases

  • Financial
  • Tenders
  • Management team
  • Product

Acquisition

One company purchases the other outright.
The acquired firm does not change its legal name or structure but is just owned by a parent company.

Mergers

Combination of 2 firms under one corporate banner as a separate legal entity.

Types

Horizontal Merger

Two businesses that are in direct competition and share the same product lines and markets.

Vertical Merger

Two businesses who provides supplies e.g. a cone supplier merging with an ice cream maker

Congeneric Mergers

Two businesses that serve the same customer base in different ways. e.g. One makes TV other provides cable connection

Market Extension Merger

Two businesses that sell the same product but in different markets.

Product Extension Merger

Two businesses selling different but related products in the same market.

Conglomeration

Two businesses that have no common business