A merger is a business transaction in which two or more companies combine their operations and assets to form a single entity.
There are generally four types of economic mergers: horizontal, vertical, conglomerate, and market-extension mergers. These four types of mergers are commonly used to categorize different types of mergers based on their economic characteristics and effects
1.Horizontal merger: A horizontal merger takes place between two companies that are competitors in the same industry and at the same stage of production. These mergers often result in increased market power and decreased competition.
2.Vertical merger: A vertical merger takes place between two companies that operate at different stages of the supply chain. For example, a company that produces raw materials may merge with a company that manufactures finished products. Vertical mergers can result in cost savings and increased efficiency, but they can also lead to anti-competitive behavior.
3.Conglomerate merger: A conglomerate merger takes place between two companies that operate in completely different industries. These mergers can result in increased diversification and reduced risk, but they can also be difficult to manage due to the disparate nature of the businesses involved.
4.Market-extension merger: A market-extension merger takes place between two companies that operate in the same industry but in different geographic markets. For example, a company that sells products in Europe may merge with a company that sells similar products in Asia. These mergers can result in increased market share and economies of scale, but they can also lead to increased competition and antitrust concerns.