Mergers and how they’re structured

Mergers and how they’re structured

On Behalf of | Nov 2, 2021 | Mergers & Acquisitions |

Mergers and acquisitions in Hawaii are structured in different ways: Unlike an acquisition where one company buys another, a merger brings two companies together to be named as a single entity. Depending on the market and the size of the companies involved, mergers may occur through the following forms.

Horizontal

A horizontal merger results in a new company though the two identical entities that combined. Being on the same horizon means producing what’s considered the same product. Both companies in this case work in the same market and for identical consumers. The same market and product type exists between these two agencies, which is why they combined as one.

Vertical

Mergers and acquisitions that occur in a vertical structure result from businesses that are complementary. This is when a supplier and retailer see it fit to operate as one entity. It is beneficial, for example, if you sell baseball gloves and then merge with a leather producer. Your costs in production are only lower, and selling your own leather raises the margin of profit.

Congeneric

Congeneric mergers occur when the same consumer is served but with adjacent products or services. Imagine a person visiting the beach as a type of consumer. Though different services, a hotel that merges with the owner of the beachfront has a congeneric deal. Though they are now one, they still offer a sunny experience through adjacent means.

Strategizing for a merger in Hawaii isn’t difficult if you evaluate your business market and that of the business you’re negotiating with. Even if the final business owns a number of brands in different industries, a deal is possible that benefits all parties.