Types of Mergers

A congeneric merger is a type of merger where two companies are in the same or related industries but do not offer the same products. A congeneric merger is a type of merger where two companies are in the same or related industries but do not offer the same products.

A conglomerate merger is a merger between firms that are involved in totally unrelated business activities. There are two types of conglomerate mergers: pure and mixed. Pure conglomerate mergers involve firms with nothing in common, while mixed conglomerate mergers involve firms that are looking for product extensions or market extensions.

Horizontal merger is a business consolidation that occurs between firms who operate in the same space, often as competitors offering the same good or service. Horizontal mergers are common in industries with fewer firms, as competition tends to be higher and the synergies and potential gains in market share are much greater for merging firms in such an industry.

Market Extension Merger. As per definition, market extension merger takes place between two companies that deal in the same products but in separate markets. The main purpose of the market extension merger is to make sure that the merging companies can get access to a bigger market and that ensures a bigger client base.

Mergers Vs. Acquisitions. In an acquisition, a new company does not emerge. Instead, the smaller company is often consumed and ceases to exist with its assets becoming part of the larger company. Acquisitions – sometimes called takeovers – generally carry a more negative connotation than mergers.

The difference between market extension merger and product extension merger lies in the fact that the later is meant to add to the existing variety of products and services offered by the respective merging companies; while, in case of the former the two merging companies are dealing in similar products.

A vertical merger, also known as a vertical integration, is a merger between a manufacturer and a supplier within the same industry. These types of mergers or integrations occur when a company seeks to reduce operating costs and increase efficiency to realize higher profits.