Companies doing business in California or any other state may feel that a merger is in their best interests. In a vertical merger, a supplier will merge with one of the businesses that it supplies products to. A horizontal merger involves competing companies in the same field coming together to create a larger and potentially stronger entity. In some cases, a horizontal merger is hostile in nature, which means that one organization forcefully takes over the other.
Market extension mergers are similar to a horizontal merger. This occurs when a company that does business in one part of the country or world merges with a company that does business elsewhere. By combining forces, the new entity has access to a larger market and may be more efficient overall. In some cases, two businesses may come together that were not in direct competition with each other.
This is referred to as a conglomerate merger, and this is generally done because one company wants to increase revenue by any means necessary. Therefore, it will look to acquire profitable businesses regardless of what industry they are in. In some cases, companies only merge for specific purposes. For instance, they could come together to develop a specific product or to share research about their customer base.
There may be many benefits that a company derives from merging with another organization. In some cases, it may mean gaining access to a new product or the expertise to develop a new product. It could also result in access to a larger customer base or greater brand awareness. However, prior to acquiring a new business, it may be a good idea to review the idea with an attorney. This might make it easier to conduct due diligence prior to the merger being finalized.