Mergers and acquisitions can take various forms, each with its own advantages and considerations. The most common types of M&A deals include mergers, acquisitions, and joint ventures.
A merger involves the combination of two or more companies into a single entity. This type of deal typically occurs when two organisations want to pool their resources, expand their market share, or achieve operational efficiencies. Mergers can be either horizontal (between companies operating in the same industry), vertical (between companies in different stages of the supply chain), or conglomerate (between unrelated companies).
On the other hand, an acquisition occurs when one company purchases another company, either through a friendly or hostile takeover. Acquisitions are often driven by the desire to gain access to new markets, technologies, or talent. Friendly acquisitions involve negotiations and agreement between both parties, while hostile takeovers occur when the acquiring company bypasses the target company's management and directly approaches its shareholders.
Joint ventures, on the other hand, involve the creation of a new entity by two or more companies, with each party contributing resources and sharing ownership. Joint ventures are commonly used to enter new markets, leverage complementary strengths, or share risks and costs.