Types of Mergers and Acquisitions

There are different ways in which mergers and acquisitions can be carried out, which depend on the companies involved, their industries, stages of production and products or services. The type of transaction to be carried out depends on the strategy and objectives of the parties in the particular case.

Among the most common types of mergers and acquisitions are horizontal, vertical, congeneric, and conglomerate.

An M&A transaction is horizontal when the companies involved operate in the same industry and market with similar products or services. The merger or acquisition is made with the intention of increasing market share and decreasing competition in the market.

When it is a vertical merger or acquisition, it also involves companies in the same industry, but at different stages of production. In this case, the intention behind the transaction, usually with suppliers or wholesalers, is to reduce costs and increase efficiency in the supply chain.

A congeneric merger or acquisition occurs when companies offer different products or services in the same industry and with the same market, so they are usually competitors. The closing of the transaction usually increases market share and diversification and/or expansion of the product or service line.

Finally, the transaction is a conglomerate when there is no industrial and commercial relationship between the companies. In this case, there are two possibilities: the companies may continue their operations independently after the transaction is closed, or the transaction may be done to unite them and expand products and services significantly.

It is worth mentioning that in all M&A operations, resources and time must be allocated to align the corporate and human cultures of the companies; however, in the latter case, that is, in conglomerate transactions, it is an even greater challenge, since the differences in approaches and operations will be greater.


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