Vertical integration means one company takes control over another company or companies who are in the same product (either in distribution or in production) to gain control over the total chain of product.Companies prefer this type of integration because the supplier is unreliable, high prices may be charged, to earn more margins and for a significant growth of industry.Types of vertical integrationThe types of vertical integration are as follows −Backward integration − When a company gains control over the raw material supply company.Forward integration − When a company gains control over a distribution/logistic company.Balance integration − Mixture of both forward ... Read More

Irrespective of size or its nature every firm or organization needs growth and expansion and these can be done by the way of integration followed by firms or organizations. The main integrations followed by companies or vertical and horizontal integration.Horizontal integration involves integration of two companies in same business line or same chain whereas vertical integration involves integration of various entities in distribution chainHorizontal integrationIf integration is done between companies who are in the same line of business or they have the same business activities is called horizontal integration. They may have the same complementary product, by product or other ... Read More

In business, whether you are buyer or seller, the transactions can be made either in purchase and sale of assets or in purchase and sale of common stock. The buyer or seller can choose their option (there can be various reasons in choosing their option).An asset purchase transaction is the sum of sales of individual assets and agreed upon liabilities. In stock acquisition, ownership transfer will take place and the entity has the same assets and liabilities.Asset purchaseIn this, the legal entity will not change but the buyer will purchase individual assets (equipment's, goodwill, inventory etc.). An asset sale does ... Read More

Takeover is the process of acquiring a control over another business unit by controlling their assets, either directly or indirectly.Generally, takeovers are done by either hostile or friendly approach. They are common in larger business units and help the external growth of a business.ReasonsThe reasons for a takeover in a business are as follows −Market share.Increase intangible assets.Diversification.Decrease competition.TypesThe types of takeovers are as follows −Friendly takeover − Takeover is done after negotiations and agreements.Hostile takeover − Takeover is done by buying the required number of shares in a targeted company in an open market.Bailout takeover − Takeover is done ... Read More

The terms acquisition, takeover, merger and amalgamation are explained below −AcquisitionAcquisition is a purchase of more than 50% shares/stake of another company.Payments can be made in either cash or stock or by both.Friendly approaches or hostile approaches are used in acquisition.Friendly approach means Boards of directors support the acquisition.Hostile approach means Boards of directors will not support the acquisition.TakeoverTakeover is transfer/control interest of a company either by friendly or hostile approach.Generally, takeover is done by bigger companies.It can be done in straight, ownership capture, revival and bailout.MergerUpon approval of management and shareholders (in case of public companies), two companies combine ... Read More

Acquisition is the process of acquiring one or more companies by acquirer without affecting the acquirer brand name or autonomy. The targeted company or companies will exist and continue their operations but they have to work under acquirer name and their terms. This ownership change takes place.The main objective of acquisition is to improve present performances, decrease the competition in the market, to gain technology and expertise and economic scale.The purpose and classification is based on involved companies and reasons may not be the same because companies at times don’t make them public due to different reasons.TypesThere are different types ... Read More

Acquisition means one company takes control over another company by acquiring more than 50% of shares of the targeted company. Some of the reasons for acquisition are increased market share, diversification, cost reductions, etc.Acquisition structure is the organized framework for acquisition of a company. It considers both cash and non-cash (earn outs, equity rolled, take backs etc.).There are 3 types in acquisition structure, which is as follows −Stock purchase − Buys stocks from targeted companies' stockholders.Asset purchases − Buys only assets and liabilities mentioned in agreement.Merger.PurposeListed below are the purposes for an acquisition −Improve performance.Increase production by technology.Acquisition at early ... Read More

With change in market environments and evolving needs of customers, companies need to change their strategies and their dimensions to sustain and increase their market share.Merger is nothing but, when two companies combine to form a new company due to several reasons. The main motive is to expand their arms, explore new markets, increase their market share, decrease operational cost, etc.Terms used in merger are Acquiring Company and acquired company. Mergers can be done either by cash or by stock.In a cash merger, the acquiring company will pay in cash for the acquired company stocks.In a stock merger, the acquiring ... Read More

Merger is nothing but an agreement between two or more organizations or companies to form as a one company or organization.The main objective of merger is to gain more market share or to enter into new market areas or sectors and maximize their profits. It also helps companies to restructure their business units according to market changes.Merger helps companies to sustain market changes and go for more customer base.Types of mergersThe types of mergers are explained below −Horizontal Merger − If one company merges with another company or companies which have indirect competition in terms of product lines/markets is called ... Read More

The main objective of both merger and acquisitions are the same, that is to restructure their corporate order. That means both are involved in joining two or more than two business entities to restructure their corporate structure according to changes in market or in their sector.MergerMerger involves combining an individual organization to give rise to a new business unit or entity. In merger, a new entity, name, ownership, employees (combination of organizations) and management will form. The benefit in the merger is mutual that means merger organizations will have certain benefits.The main objective of merger is to expand their present ... Read More