Acquisitions and mergers have been normal business practices dating back to the late 19th century. The transactions occur for a variety of reasons that include enabling greater financial stability and providing access to other markets. In recent years, some of the more well-known acquisitions and mergers involved Verizon’s acquisition of the British company known as Vodafone, the merger of Dow Chemical and DuPont, and the merging of Kraft with Heinz. The transactions between companies or corporations are complex and often fall under one of four different categories

Horizontal Transactions
The acquisition or merger typically involves two businesses or companies that offer the same types of products. For example, although Dow and Dupont are both renowned chemical manufacturers, the merging allowed for the development of three new companies having individual interests. Other reasons for horizontal mergers include the ability for one company to eliminate another as competition. The transactions enable the newly formed conglomerate to increase revenues by expanding its reach in addition to cutting overhead expenses while increasing production. 

Vertical Mergers
The acquisition occurs when two businesses involved in different phases of a particular industry become partners. The BBC is an example of a vertically merged company that offers a wide variety of services and products ranging from television, radio, and online broadcasting to creating educational and entertainment products. By having the ability to offer a variety of services under one heading, companies have ample resources to cut costs and time during production while experiencing increased revenue. 

Concentric Acquisitions
The transaction allows companies to combine efforts that offer complementary services or products. A concentric merger occurred when Coke bought the Vitamin Water company in 2007. The action enabled the corporation to have a larger footprint within the beverage industry by offering a larger selection of products that appeal to a more diverse demographic. By gaining new consumers, the company also increases its revenue stream. 

Conglomerate Transactions
The acquisitions or mergers involve two companies deciding to become one entity. The transaction allows both to broaden their services or product offerings. The newly formed organization gains a larger share of the market with increased revenues while reducing losses. An example of a recent conglomerate formation includes Amazon’s acquisition of Whole Foods.