Types of Mergers and Acquisitions With Examples

In mergers and acquisitions transactions, various methods of evaluating a company are used, the content of which is detailed in the relevant literature. Take a look at the types of mergers and acquisitions with examples below.

The Importance of Mergers and Acquisitions Deals

Mergers and acquisitions service software offers a wide range of consulting services for cross-border and local mergers and acquisitions (M&A) transactions, as well as financial and strategic consulting services, targeting, and market entry support. Take a look at its advantages below:

  • Acquisition (purchase) consulting services.
  • Consulting services for (sale).
  • Regional consolidations in several countries (horizontal consolidation).
  • Finding the target company (acquisition target) and verifying the transaction.
  • Identification of the target company – the target of the acquisition.
  • Industry analysis and go-to-market strategy.
  • A comprehensive preliminary check before submitting an offer.
  • Preparation of documentation for the acquisition or disposal.
  • Preparation and evaluation of a business plan.
  • Consulting on acquisitions from debt and capital funding sources.

Currently, a significant number of major mergers and acquisitions are of an international nature and are therefore often carried out in accordance with international customs. But since often not all the information necessary and reliable for assessing the value of a company is available, assessing the value of a company is ultimately more art than science. In practice, several evaluation methods are used in parallel and their results serve to determine the true value of the company.

Despite the fact that mergers and acquisitions deals have some similarities, you need to understand their differences. The main difference between the two is their definition. If a merger involves the combination of two or more companies that voluntarily establish a new company, then the takeover process is when one company buys another. Note that in a merger, a new company is formed, but not in a takeover. In addition, a merger usually involves up to three companies, and acquisition only two.

What Are the Main Reasons for Mergers and Acquisitions?

There are the following types of mergers and acquisitions with examples:

  • Horizontal – amalgamation of companies with the same type of activity. They are carried out with the aim of increasing opportunities for development and reducing competition with large companies.
  • Vertical – an association of companies with different types of activities. For example, one is a supplier of raw materials, and the other is a manufacturer. The increase in profit from this type of merger is due to a decrease in cost.
  • Parallel – an association of companies whose products are interconnected. For example, a computer manufacturer is teaming up with a manufacturer of operating systems for them. This collaboration reduces costs and improves product quality.
  • Circular – an association of companies whose activities were not previously linked in any way. None of them was a supplier of raw materials, a transporter for the products of the other, and they were not competitors.
  • Reorganization – companies with different lines of business are connected.

Reasons for merger and acquisition of a company establish cost minimization by reducing the number of employees since one company assumes only one specific department (advertising, finance, accounting, etc.) instead of two. The same principle applies to all personnel, that is, a decrease, on average, by 2 times. The presence of two management teams is also losing its relevance, since, having concluded a merger and acquisition transaction, the company needs one leader, since one company was formed.