Mergers and their types
                     MERGERS AND THEIR 
TYPES
WHAT IS A MERGER?
o A merger refers to an agreement in which two 
companies join together to form one company. In other 
words, a merger is the combination of two companies 
into a single legal entity. In this article, we will look at 
different types of mergers that companies can undergo.
Source: corporatefinanceinstitute.com
2
TYPES OF MERGERS
o There are five commonly-referred to types of 
business combinations known as mergers: 
conglomerate merger, horizontal merger, market 
extension merger, vertical merger and product 
extension merger. 
Source: 
archive.mbda.gov 3
CONGLOMERATE
o A merger between firms that are involved in totally 
unrelated business activities. There are two types of 
conglomerate mergers: pure and mixed. 
o Pure conglomerate mergers involve firms with nothing 
in common, while mixed conglomerate mergers involve 
firms that are looking for product extensions or market 
extensions.
Source: 
archive.mbda.gov 4
HORIZONTAL MERGER
o A merger occurring between companies in the same 
industry. 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. 
Source: 
archive.mbda.gov 5
MARKET EXTENSION 
MERGERS
o A market extension merger takes place between two 
companies that deal in the same products but in 
separate markets. 
o 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.
Source: 
archive.mbda.gov 6
PRODUCT EXTENSION 
MERGERS
o A product extension merger takes place between two 
business organizations that deal in products that are 
related to each other and operate in the same market. 
o The product extension merger allows the merging 
companies to group together their products and get 
access to a bigger set of consumers.
Source: 
archive.mbda.gov 7
VERTICAL MERGER
o A merger between two companies producing different 
goods or services for one specific finished product. A 
vertical merger occurs when two or more firms, 
operating at different levels within an industry's supply 
chain, merge operations.
Source: 
archive.mbda.gov 8
WHICH TYPE OF 
MERGER IS RIGHT FOR 
o YTheO righUt ty?pe of merger for you will ultimately depend 
on your goals and your M&A strategy. 
o Understanding which type of merger or acquisition will 
best support your strategy requires a careful look at 
the pros and cons of each, and the support of an 
expert advisor for guidance before the companies join 
together.
Source: 
www.ansarada.com 9
THANK YOU