What is Vertical Merger?

Vertical merger arises as a result of integration of those units which are engaged in different stages of production of product. It is also known as sequence or process merger. Most often, the merger is purposed to increase synergies, gain more control of the supply chain process, and increase business. Also, it often results in reduced costs and increased productivity and efficiency.

The idea behind a vertical merger is that when companies combine their performance will be better than operating as individual parts. A vertical merger thus has a few key advantages:

  • More control of the supply chain process
  • Increase in consumer base
  • Reduced market competition
  • Typically reduces costs and increases productivity and efficiency