Another example of merger types is a market extension merger.
A market extension merger occurs between two companies that deal in the same products but in separate markets. A market extension merger occurs, for example, when financial institutions offering the same services merge in their quest to expand to larger markets.
Japan’s Mergers and Acquisitions Boom | Morgan Stanley
Another example is when a national company mergers with a locally based company. The goal of the market extension merger is to gain access to a larger market and therefore, a greater client base. It is critical, however, that the right business partner be identified if you are considering a market extension merger. In addition, what made the local company successful in the first place may become too diluted after a merger with a larger, national organization.
Mergers and Acquisitions as Part of Your Growth Strategy
A product extension merger differs a bit from a market extension market. It takes place between two business organizations that deal in related products within the same market. The former manufactures Bluetooth personal area network hardware systems and chips for wireless LAN. The latter, Mobillink, creates product designs meant for handsets that are equipped with Global System for Mobil Communications technology.
The two products complement one another. Advantages of a product extension merger is that it enables the merging companies to combine their products in a way that expands the client base and profits along with it.
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The disadvantages are that it can be a challenge to identify just the right merger partner. If one company is weak, it can end up harming the newly formed entity. Save my name, email, and website in this browser for the next time I comment.
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Home About Contact. Nate Nead.
Investment Bank. Nate works works with middle-market corporate clients looking to acquire, sell, divest or raise growth capital from qualified buyers and institutional investors. He is the chief evangelist of the company's growing digital investment banking platform.
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Nate resides in Seattle, Washington. Tags: merger process , merger types , mergers and acquisitions.
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