Horizontal vs. Vertical Mergers and Acquisitions

​Depending on the specific nature of the transaction, mergers and acquisitions (M&As) may fall into one or more established categories or types. For example, most M&A transactions are either horizontal or vertical.

Horizontal M&As occur among two or more companies that are similar or operate in the same industry. While these companies may or may not be direct competitors, the primary purpose of a horizontal M&A is to increase company share in a particular market. Companies also pursue horizontal M&As to diversify or cut operational costs. Horizontal M&A transactions between companies with complementary capabilities can prove particularly successful.

By contrast, vertical M&As concentrate less on increasing market share and more on controlling and optimizing different supply chain stages. A company pursuing a vertical M&A wants to enhance the production or distribution of its products. The benefits of a vertical M&A include increased efficiency, decreased operating costs, and greater quality control.

Christopher Riegg

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