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M&A Types & Their Strategic Benefits
Mergers and acquisitions (M&A) are divided into various types depending on forms and purposes.
In this column, we will explore horizontal M&A, vertical M&A, conglomerate M&A, and examine the strategic advantages each type provides to companies.
Based on each type, M&A can aid corporate growth through various effects such as market share expansion, cost reduction, business diversification, and listing effects.
Horizontal M&A
An acquisition between competing companies within the same industry primarily aims to expand market share and reduce competition.
As in the case of Hanwha Techwin acquiring Samsung Techwin, horizontal M&A can achieve economies of scale but may be subject to antitrust regulations.
Vertical M&A
M&A between companies at different stages in the value chain aims to enhance supply chain stability and operating efficiency.
A representative example of vertical M&A is Hyundai Motor's acquisition of Boston Dynamics, a robotics company.
This can lead to smooth supply and cost-saving effects for the company.
Conglomerate M&A
M&A between companies in different industries is aimed at entering new fields and diversifying risks.
The acquisition of the semiconductor company Hynix by SK Telecom is an example of seeking new growth opportunities through business diversification.
Conclusion
Each type of M&A can be utilized in various ways according to a company's growth strategy, and strategic choices aligned with corporate goals and market conditions lead to successful M&A.
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