Making decisions as a business owner isn’t easy. There are various avenues you can take to promote the growth of your company. Something you may have considered is a corporate merger. During a merger, two or more separate companies come together to form one distinct entity.
However, a corporate merger can take various forms. Outlined below are some key examples.
Conglomerate mergers
Conglomerate mergers occur when two businesses in different industries come together. Usually, this is viewed as a way to expand business operations and branch out into different areas.
One common example of a conglomerate merger is when Walt Disney merged with the American Broadcasting Company (ABC).
Horizontal mergers
In contrast to conglomerate mergers, a horizontal merger involves two companies within the same sector merging together. For example, two businesses operating within the food and beverage industries may merge, so that they can corner the market and share resources.
A notable example of a horizontal merger occurred when Papa Murphy’s Pizza Company joined forces with MTY Food Group and diversified its operations.
Vertical mergers
As the name suggests, vertical mergers take a top-down approach. Usually, vertical mergers involve a larger company acquiring its suppliers. One common example is when Walt Disney acquired Pixar Animation Studios, so it could streamline operations and benefit from Pixar’s talented employees.
A merger can be beneficial for your business, but it is a major decision. You need to make sure you carry out due diligence and assess the potential benefits and drawbacks with legal counsel. We provide guidance to businesses engaging in a variety of transactions. Contact us to schedule a consultation.
