The various types of mergers

The various types of mergers

On Behalf of | Sep 5, 2019 | Mergers & Acquisitions |

Building a business form the ground up can be a monumental task. Those businesses that are able to do so often find themselves plateauing at a certain point. Although they may be able to hire more people, acquire new commercial property, or diversify their business offerings, sometimes that isn’t enough. This is where a merger may prove beneficial.

A merger occurs when two companies voluntarily agree to combine into one entity. By merging, companies can reduce costs, enter new markets with already established infrastructures, and expand their customer reach. Of course, no two mergers are the same.

In fact, there are multiple types of mergers that may prove beneficial to Baton Rouge businesses. For example, a conglomerate merger occurs when two businesses that operate in unrelated fields. These types of mergers are often for the benefit of shareholders.

There are other types of mergers, too. A congeneric merger seeks to bring two companies together with overlapping technologies and research and development practices with the goal of extending a product line to reach more consumers. Market extensions bring together two companies that sell the same goods or services but in different markets, thereby expanding their consumer bases. Other mergers can seek to consolidate supply lines to reduce costs and give businesses a leg up on the competition.

There are a lot of decisions that businesses must make. Many of them can have serious ramifications for a long time to come. Choosing to merge with another company is one of these decisions, meaning that they shouldn’t be made lightly. This is why Baton Rouge businesses should think about discussing these matters with an experienced attorney before moving forward with any agreements.