Merger Analysis

Introduction

The current trend in the dynamic business environment requires that businesses become very liquid and diversifies their services or products to remain relevant and enjoy competitive advantage. One way in which businesses may become relevant and withstand the storm of adverse competition is through a merger. Merging is coming together of two or more companies that may be related or unrelated to increase productivity and enjoy the benefits of economies of scale. Mergers take many forms for instance vertical merger occurs when a company or business having a current or potential buyer-seller relationship integrate. It is meant to advance the production process. Vertical mergers according to Megginson and Smart (2010) may be forward integration when the acquired companies provide subsequent steps in the production process or backward integration when the acquired companies provides the earlier steps in the production process. The benefits of vertical mergers range from surety of quality products procurement in backward integration and reduced input prices. Forward integration’s emphasis on output quality and distribution ensures that the outlet of a product is enabled.

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