Intro to M&A
Make sure to read the most important part at the bottom - "M&A Financing" Types of Mergers: Horizontal Integration: mergers of companies in the same industry Vertical Integration: same production vertical but different level, e.g. tech company acquiring chips manufacturer; restaurant buying delivery service Conglomerates: acquiring completely unrelated businesses in different industries or geographies for diversification Why would you buy a company? Consolidation - making a bunch of smaller companies into one Cost savings - such as from strengthened supply chain etc Geographic expansion Seller is undervalued Acquire new customer base or distribution channels Tax benefits Expand or diversify product lines Intellectual Property CEO ego and pride Why would you want to get acquired? PE Firms or Private Businesses: PE firms and owners of private businesses may want to cash in their hard work after owning or operating their business for a period of time The alternative - IPO -