Merger (economics)

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Merger - merger of at least two enterprises into one. It involves the absorption of one company by others or the creation of a completely new enterprise from the combined enterprises. Types of mergers

Horizontal merger (horizontal) - when merging companies produce similar products in the same industry. The motives for merging enterprises can be horizontally: willingness to reduce costs, increase efficiency, economies of scale or increase security. The effects of this type of merger are: increased concentration and increased market power of the enterprise.

In this group, we distinguish mergers expanding the market and mergers that broaden the offer.

This type of merger is mainly used to increase market share, which is why it often raises opposition from antimonopoly authorities (abuse of a dominant position). The beneficial effect of this merger model, from the point of view of the consumer, may be an increase in the desire to reduce costs in the sector, which is the result of adjusting the level of costs and prices to the level of the dominant company in the industry.

Vertical (vertical) merger - when companies dealing with different stages of the same product are merged.

The motive for merging businesses in a vertical way is usually the desire to increase control over the component stages of your business.

This group distinguishes vertical fusion up and vertical merger down depending on whether the entity connects with its existing supplier (down) or with the current recipient (up).

Conglomerate merger - occurs when enterprises operate in other industries.

The motives for such mergers may be: diversification of the production mix, creation of a multi-sector conglomerate, etc.

Podstawowe rodzaje operacji to MBO (Management Buy-Out), LBO (Leverage Buy-Out), LMBO (Leverage Management Buy-Out).



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