In today’s business, mergers and acquisitions are regular occurrences. In fact, it happens so often that many consumers can’t keep up with the new company names or products. To continue thriving in our economy, companies have to grow and evolve, and that sometimes means the combination of two companies will work better for the general public and the companies involved. There are two general types of mergers and acquisitions. The first is the horizontal merger, and the other is the vertical merger. A horizontal merger is two very similar companies joining together to work as one. An example of this would be two telecommunications companies joining forces to offer similar services after the merger. While a horizontal merger is perfectly acceptable, there are many who frown on it because it can offer fewer competitors if they are located in the same market areas. When two companies merge to form one, consumers often find they no longer have a choice between two companies and must, instead, deal only with the one new company. Without the healthy competition between two companies, customer service may decline while prices skyrocket. Essentially, a monopoly is created and consumers may suffer.
A vertical merger happens when a client and a company merge. An example of this might be when a hot dog company merges with a hot dog bun company. Because both products are still offered and they work together, consumers get the products they need. A vertical merger does not eliminate the competition for a particular company and is therefore often seen as a much more welcome combination.
Mergers and acquisitions have been a part of business for hundreds of years, though they weren’t as prevalent as they are today. The first significant occurrence of mergers happened in the late 1800s and early 1900s, though the concept wasn’t new even then. Since that large wave of mergers and acquisitions, which has become known as the Great Merger Movement, there have been six more significant waves of merger and acquisitions. In most cases, the mergers are peaceful and welcome on the part of both companies involved. The 1990s saw several hostile takeovers, however. The years since 2000 have seen many international mergers and acquisitions, and this is changing the face of business. There is no doubt that these new overseas mergers and acquisitions will continue to alter the way we do business, and chances are that company takeovers and fusions will shape the global economy for several years to come.