What are the advantages and disadvantages of mergers?

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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 mergers

The 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 horizontal merger.
Vertical Merger − If one company merges with another company or companies which are in the same supply chain is called vertical merger.
Extension Merger − If one company merges with another company or companies who are in the same service or product to expand their market share is called market extension merger.
Product extension Merger − If one company merges with another company or companies who are in different services or products but there are in related services or products is called product extension merger.
Conglomerate Merger − If one company merges with another company or companies who are in different sectors (to explore different sectors) is called conglomerate merger.