Vertical Merger And Acquisition

Worldwide Business Environment has been changing speedily because of deviations in a Global Environment. Technological advancements have reformed the way of doing business. Every organization wish to be identified in worthwhile and adopt distinct strategies to compete this dynamic environment. In today’s globalized environment, organizations think Merger and Acquisition (M&A) the best tool to be competitive in the market and to intense their market share by broadening their portfolio, getting into the new markets, reducing costs and improving profitability, quick build of market presence, capitalization and other synergies. However, not every combination creates merit for the shareholders of the involved parties. Conversely, all economic sectors

The merger is separated into different types: Horizontal, Vertical, Conglomerate and Concentric Merger. When two, identical business firms get into a merger it is defined as Horizontal Merger. Whereas two firms in a same industry deal with different stages of the production process and gets combined, such is termed as Vertical Merger. With Conglomerate Merger companies deal from two different industrial sectors and combine their operations (Mueller, 1977). Concentric Merger occurs when firms do not have an identical business, but are related to

Mitchell and Mulherin, 1996; Brealey and Myers, 2003). First Wave dated from 1893-1904, includes many horizontal mergers within the US manufacturing and transportation industries and lasted to the World War I. Most of the merger held in this phase becomes failed because they could not reach on the desired performance. The Second Wave period was from 1916-1929 that mainly included vertical mergers within the automotive industry. In this era companies got into the backward and forward integration by supply and distribution majorly in primary producers of metals, petroleum products, transport equipment and chemicals. Third Wave (1955-1970) introduced conglomerate mergers that occurred between numerous US firms. Stock market crash in early 70’s led to the end of this wave. Highly leveraged takeover era dated from 1974-1989 and was called Forth Wave. In this era merger took place between oil and gas industry, pharmaceutical industry, banking and airline industries. This wave involved co-generic mergers, hostile takeovers, leveraged transactions and ended up with the collapse of banks. Cross-border mergers started from 1993-2000 and it was called the era of Fifth Wave. In result of globalization and the increase in competition, this era emphasized on massive transactions to get competitive advantage through size. This era was on the banking and telecom sector and ended due to