05.21.08
Guide To Mergers And Investments
The economy today is not stabilized. Even big companies have to confront the ups and downs that come their way. But the only thing that keeps them going is survival. They have to survive in the market and progress swiftly or gradually. One strategy to advancement is that of ‘mergers’ between companies. There are numerous mergers that take place locally but they do not have a great effect on the market especially the consumers. But the mergers that take place at the national or international level have a profound impact on the economies of the concerned countries.
There are different reasons behind a merger of two or more companies. But first of all there exist diverse types of mergers.
a) Commission that is worried about the market and the consumers keeps a hawk’s eye on such mergers and at times detains the companies from merging in the interest of the people.
b) The Vertical Mergers- are the mergers between a supplier and the distributor company of the supplies. This is an anti competitive merger but can be highly beneficial to the company. It is because the distributor will no more have to pay for the manufacturing of the supplies, it gets the product at the base price. So there is good cost saving due to this. Vertical merger also rules out lot of competition from the market.
c) Horizontal Mergers- where two competing companies conjoin to form a single large company. The companies in horizontal mergers are selling the same product in the same market and so are contenders to each other. Such a merger can have a tremendous influence on the market from creating monopoly to escalating prices of the commodity. This is precisely the reason that The Federal Trade.
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