Business attorney Clem Abrams returns this week with Mergers & Acquisitions (M&A) part 4 of 4. This week, he goes over a traditional merger. Clem Abrams is a business attorney in Chesapeake, Virginia with over 20 years’ experience. Mr. Abrams regularly advises Davis Law, PLC clients on transaction matters, including complex M&A, asset and stock purchases, restructuring, and corporate compliance issues.
Transcription:
Welcome back I’m Clem Abrams from Davis Law, PLC. Today we discuss a second type of M&A deal, the traditional merger transaction. In our previous videos we emphasized that over a business’s lifecycle it should draw its best resources into a system where its output benefits the marketplace and the stakeholders it’s committed to. This is why contemplation of a merger should embrace enhancing marketplace benefits and stakeholders interests. Now, there are three basic types of mergers number one a horizontal merger which is characteristic of the merging of companies that sell similar products in the same market a typical result of a horizontal merger is decreased competition in that particular market segment. For example consider Disney and Pixar as a typical horizontal merger. Number two is vertical mergers which are the next type that are typical of companies that operate in the same industry but at different stages of the production cycle this would be like Tesla’s full vertical integration. Finally there are mergers of equals. As it’s name implies, this occurs when companies of equal size come together as one company. One recent example is the merger of BB&T and SunTrust. Now that’s a quick summary of the types of traditional mergers. Follow us next week as we discuss the sale of stock or equity, thanks for joining us.