The process of mergers and acquisitions advisory involves the consolidation of two or more companies into a single entity, resulting in the loss of individual identities for the merging companies. This procedure does not involve any new investments, but rather entails an exchange of shares between the companies involved. Typically, the surviving company, which retains its identity, is the buyer, while the seller company ceases to exist.

India stands as the second-fastest growing economy globally, attracting the attention of investors, large corporations, and industrial conglomerates. The Indian market is perceived as being in a phase of rapid growth and prosperity, offering high returns on capital and shareholder investments. Consequently, both mergers and acquisitions have experienced a significant surge in activity.

Mergers and acquisitions are essential services utilized by organizations to consolidate and create a unified entity in order to achieve economies of scale, expand their market presence, acquire strategic expertise, and enhance their competitive edge.

Put simply, companies view mergers as a crucial mechanism to enhance their operations and boost profitability. The Indian markets have witnessed a rising trend in mergers, potentially attributed to the collaboration of major industrial conglomerates, the consolidation of businesses by multinational corporations operating in India, intensifying competition against imports, and increased acquisition activities.

Horizontal merger refers to the consolidation of two companies that are direct competitors and operate in the same product lines and markets. This type of merger occurs when two companies in the same industry decide to combine their operations to gain a larger market share and eliminate competition.

On the other hand, a vertical merger occurs when there is a merger between a customer and a business or a supplier and a corporation. In this type of merger, the companies involved have a definite buyer-seller relationship or a supplier-customer relationship. The purpose of a vertical merger is to streamline the supply chain and improve efficiency by integrating different stages of production or distribution.

Lastly, a conglomerate merger is a merger between companies that do not have any common business areas or any kind of relationship. In this type of merger, the consolidated companies may sell related products or share marketing and distribution channels or production processes. There are different classifications of conglomerate mergers.

Product-extension merger: This type of conglomerate merger occurs when companies sell different but related products in the same market or sell non-competing products but use similar marketing channels or manufacturing processes.
Market-extension merger: In this type of conglomerate merger, companies sell the same products in different markets or geographic regions. The purpose is to expand the market reach and increase sales.

Pure Conglomerate merger: This type of merger occurs when two companies merge without any obvious relationship of any kind. The purpose may be to diversify the business portfolio or enter new industries.

Overall, mergers can take different forms depending on the nature of the companies involved and their strategic objectives.
At NYCA Global, we provide comprehensive services in the field of Mergers and Acquisitions.