Whether you’re looking to scale up quickly, boost market share, or compete more effectively against dominant players, merging with another business is often the best option. But not all mergers are created equal, and the structure you pursue should reflect your goals and the kind of integration that’s feasible for your organisation. The type of structure you choose will shape everything from deal terms to governance and shareholder dynamics, so it’s worth taking the time to understand the six main types of merger – and what’s good and bad about each – before you move from exploratory conversations to formal agreements.
What is a business merger?
A business merger is when two existing, independent companies combine to form a single legal entity. The aim is to create a bigger company that can reduce competition, deliver economies of scale and improve operations.
The most common type of merger is a horizontal merger, where businesses at the same stage of production merge to increase their market size and eliminate competition. A vertical merger, on the other hand, brings together companies from different stages of the supply chain, such as a manufacturer acquiring a supplier or distributor.
A merger might also involve combining brands under one umbrella, for example when Eagle Bancshares and RBC Centura merged to become YRC Worldwide. This can involve significant changes in workplace culture and can lead to layoffs. It can also require the decision to discard both names and create a new corporate identity, which is covered under the topic of brand architecture.
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