Types of combined companies

· horizontal mergers and acquisitions – consolidation of the companies from one and the same industry, manufacturing the same products and using the same phases of production;

· vertical mergers and acquisitions – consolidation of the companies from different industries but interconnected by the technological process of finished product manufacturing;

· conglomerate mergers and acquisitions – consolidation of the companies from different industries, which do not have any production commonness, in other words, the mergers and acquisitions of the companies from one industry with the companies from the other one, which are not either suppliers, or clients, or competitors.

 

Mergers and acquisitions may be:

· friendly (amicable) mergers and acquisitions – the integration processes when the companies’ management personnel and shareholders support such transactions;

· hostile takeovers - the takeovers when the target company’ management personnel do not agree with the transaction prepared and take a number of the measures to prevent from such a takeover.

 

Reasons behind mergers and acquisitions:

· the world-wide liberalization of economic relations, which is reflected in the international law and the national laws and legislations of the countries;

· liberalization of the capital trans-boundary flow. The opportunity of purchasing the corporate securities by foreigners, enabling the financing of international mergers and acquisitions predominantly on the basis of exchange in shares; changes in the markets of capital; more intensive activities of the market dealers and brokers; and issue of new financial instruments.

· increasing significance of high-cost research-and-development activities дорогостоящие исследования и разработки, the increased level of risks in the field of research-and-development, qualitative technological changes.

· reduced costs of transportation and communications, having resulted in expansion of the companies’ markets, including and mainly outside the national boundaries. The new information technologies enable these companies to exercise management of and control over the internationalized production profiles over a distance.

 

The basis for this boom of mergers and acquisitions is the combination of all the above key factors. At the same time the intensity of the above processes is often influenced by any crisis or emergency situation. So, under any crisis or emergency situation many companies in their efforts to avoid any deterioration of their financial condition or any possible bankruptcy do prefer to amalgamate with a more successful competitor.