Reasons for Company Mergers and what is Involved

We frequently read stories of two or more businesses agreeing to combine their resources or hear statements by the relevant CEOs in television interviews. In practice, company mergers are a reasonably common feature of the business world and are of three main types: horizontal, vertical, or conglomerate. Let’s examine each of these in more detail:

Horizontal

This type accounts for many of the largest unions and involves businesses that perform similar services within the same industry. For example, an airfreight service might wish to join forces with a trucking company. Pooling their expertise and resources can help each to extend its services, cut operating costs and compete more effectively with rival organisations.

Vertical

In this scenario, company mergers intend to unite businesses engaged in different stages of a related sales or production process. For example, a firm specialising in data storage and analysis could gain greater control of its business operations by uniting with a firm whose speciality is developing encryption software. In parallel, the software business gains the means to extend its customer base.

Conglomerate

As the name seems to imply, this type of union will typically involve largely unrelated businesses and is often a strategy employed as a means to reduce risks. For instance, such company mergers could help several different manufacturers to cope with changing consumer demands. Thus a cooperative agreement between a fitness franchise, a sportswear manufacturer and a health foods producer could benefit all three, increasing sales and guaranteeing a more stable future for each participating entity.

Naturally, corporate unions such as those hinted at above could be negotiated directly between the concerned parties, leaving the finer details to be dealt with by their respective financial directors and legal teams. However, there are several advantages in delegating the entire process to a specialised firm dedicated to negotiating and implementing various company mergers. 

Often, the participating parties will differ considerably in terms of their size and market value, and the smaller business will frequently lack its potential buyer’s financial and legal resources. Under such circumstances, it can be a great comfort to know that you have the support of an expert whose sole interest rests in securing and overseeing a deal that will be in your best interest. This overriding goal of a dedicated sell-side advisor can be crucial to safeguarding your interests.

Such firms specialise in company mergers and acquisitions (M&A). Their customer base ranges from small to large SMEs to major-league players, selling or uniting them through mutually beneficial agreements. Deal Leaders International is is a firm that has helped more than one hundred business owners secure profitable exit strategies while also developing an extensive international network within less than five years.  The secret of the firm’s remarkable success is a uniquely innovative approach designed to balance each stakeholder’s needs, negotiating, overseeing and implementing profitable and mutually beneficial company mergers. A dedicated sell-side advisor will ensure the best price, value and overall business outcomes for all concerned stakeholders. Perhaps you believe it might be time to expand, diversify or take steps to secure your business. Whatever your purpose, there are many sound reasons to entrust the marketing, negotiation and desired outcome to Deal Leaders International.

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