Varieties of Mergers

From the perspective of business structures, there is a whole host of different mergers.

Here are a few types, distinguished by the relationship between the two companies that are merging:

o Horizontal merger. Two companies that are in direct competition and share the same product lines and markets.

o Vertical merger. A customer and company or a supplier and company. Think of a cone supplier merging with an ice cream maker.

o Market-extension merger. Two companies that sell the same products in different markets.

o Product-extension merger. Two companies selling different but related products in the same market.

o Conglomeration. Two companies that have no common business areas.

A. Are the following statements about acquisitions and mergers true or false?

1) Mergers and acquisitions are unlikely to improve share value.

2) Companies strive to engage in mergers and acquisitions because it is the easiest way to secure fast growth.

3) When a target company agrees to be purchased it means a hostile acquisition.

4) Merger synergies are great as they may give companies the needed technology, people, infrastructure, global sales, marketing and distribution opportunities.

5) Companies that chose a venture acquisition strategy are relieved from necessity to rethink the role of R&D and knowledge management within their corporations, to fit the new offerings with the near-term strategic and operating portfolio, and to prepare a sales, manufacturing, and distribution organization.

6) Acquisition and integration of ventures is an effective method for supplementing a product and business portfolio with the best available technology, as well as enter emerging markets, with speed.

7) This strategy (A&M) requires learning about priorities, markets, technologies, speed of product/service development, integration of achievement-oriented people, and cultural fit.

8) In today's era driven by systemic innovation, acquiring and integrating capabilities, know-how, and technologies has become the least efficient route to growth and a strong alternative to internal research and product development.

9) The role of mergers and acquisitions has evolved as a strategy tool for fast-track technology-led companies.

10) Merger is the agreement between two parties to work together on one project.