Mergers And Acquisitions Essay

855 words - 3 pages

Mergers and Acquisitions PAGE \* MERGEFORMAT 1
Mergers and AcquisitionsMergers and AcquisitionsVanessa TorresUniversity of PhoenixFIN/444 Joe TomassiniMergers and AcquisitionsThere are many different types of mergers and acquisitions that companies use when looking into purchasing other companies. When an acquisition takes place it is inevitable that one of the two companies will get completely absorbed by the other. This usually happens to the company whose identity is less important and will eventually get absorbed with the company that is more important and that more important company will retain its name. There is however a difference between what a merger and acquisition is. An acquisition is when one company takes over another company and becomes the new owner (as stated above). A merger is when the stock of both companies that are merging is ceased and the company chooses a new name and a new stock takes the place of the once two separate companies. Some mergers and acquisitions that can occur when purchasing a company is horizontal, vertical, carve-out, congeneric, and conglomerate mergers and acquisitions.Learn Mergers (2010) defines horizontal mergers as "Two companies competing in the same market merge or join together. This type of merger can either have a very large effect or little to no effect on the market. When two extremely small companies combine, or horizontally merge, the results of the merger are less noticeable." When a horizontal merge takes place it is between two companies that are in direct competition, both companies are trying to sell the same type of product to consumers that are within a common market. One very popular real life example of a horizontal merger is when Daimler-Benz and Chrysler merged (both are in the car manufacturing business appealing to the same consumers).A vertical merger is when two companies that are producing two different types of goods or services merge to create one specific product. An example of this could be a company that sells baseball bats who merges with some kind of wood production company or a car manufacturer that purchases a tire company. That is an example of a supplier merging with the producer thus making it a vertical merger between two companies. A real world example of a vertical merger would be when Apple (a manufacturer of computers), merged with Intel (a company that manufactures the processors that go into Apple computers).A Carve-out merger as defines by investopedia (2010) is "Sometimes known as a partial spinoff, a carve out occurs when a parent company sells a minority (usually 20% or less) stake in a...

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