When many people hear the term “merger”, they have a picture of two companies coming together in complete agreement. This can happen and with a mutually satisfactory business plan for the joining of the two companies, they can both continue on successfully just stronger and more of a force in the market.
However, it is rarely the case and it is often the behind the scenes work of top business merger firms to actually create the terms by which the two companies can merge. In most cases, one company will have more influence over the other company. With this said, it is still not an acquisition as it is not a complete takeover of the other business.
There are also different types of mergers that an occur with Minneapolis companies. Understanding and talking to the businesses about the options is part of the role of business brokers, particularly those specializing in mergers and acquisitions.
Vertical Mergers
With a vertical merger, two companies that are producing related but not similar products join to become one company that is more effective and efficient. For example, a company may produce components for a product fabricated by another company. The company manufacturing the parts and the company completing the fabrication may choose to merge to boost productivity and lower costs for each other.
In this case, one company typically retains their name and the other company simply folds into the larger company. Often management teams stay relatively intact in their respective specializations.
Horizontal Mergers
A horizontal merger includes two companies that are competitors in the market merging to form one larger and more powerful company. Depending on the industry and the type of business, there can be laws that need to be addressed with these types of mergers.
One of the roles of professionals in business merger firms is to ensure the sale is not violating any anti-trust laws or that the merger will not be blocked by other parties.
Conglomerate Mergers
These types of mergers are not as common in Minneapolis, but they can and do occur. These are mergers when two companies that do not compete or supply each other merge.
Often these types of mergers involve management teams and even corporate leaders staying in specific roles even after the merger. These can be complex as can all mergers, which is why it is essential to have business merger firms working with both companies throughout the discussions and the actual merger process.
