Three Different Types of Company Mergers

The recipient of a bachelor's degree in finance from Indiana University, Matthew Brunstrum has worked as an advisor with Sun Acquisitions since 2017. In this capacity, Matthew Brunstrum provides mergers and acquisitions services to clients who own privately held middle market companies.

Mergers are undertaken by a pair of companies to expand their reach and gain market share for the appeasement of shareholders. Below are three of the five common types of company mergers:

1. Conglomerate - A conglomerate is a merger between companies with unrelated business sectors and, at times, operating in different countries. There are pure conglomerates in which the aforementioned is the case and mixed conglomerates that still involve unrelated enterprises, but are done to gain market share or expand their product mixes. 

2. Horizontal - Horizontal mergers often occur as a result of two or more competitors in the same industry seeking a more substantial overall market share. The 1998 merger of Chrysler and Daimler-Benz, for instance, was a horizontal merger.

3. Vertical - A vertical merger happens when two companies in the same industry's supply chain combine their operations. Benefits include increased synergies and a reduction in overall cost given dual use of the same supply chain. One of the most prominent examples was the Time Warner-America online merger in 2000.