Definition of Vertical merger

Vertical merger

A merger in which one firm acquires another firm that is in the same industry but at another
stage in the production cycle. For example, the firm being acquired serves as a supplier to the firm doing the acquiring.

Conglomerate merger

A merger involving two or more firms that are in unrelated businesses.

Horizontal merger

A merger involving two or more firms in the same industry that are both at the same
stage in the production cycle; that is two or more competitors.

Limitation on merger, consolidation, or sale

A bond covenant that restricts in some way a firm's ability to
merge or consolidate with another firm.

Merger

1) Acquisition in which all assets and liabilities are absorbed by the buyer.
2) More generally, any combination of two companies.

Vertical acquisition

Acquisition in which the acquired firm and the acquiring firm are at different steps in the
production process.

Vertical analysis

The process of dividing each expense item in the income statement of a given year by net
sales to identify expense items that rise faster or slower than a change in sales.

Vertical spread

Simultaneous purchase and sale of two options that differ only in their exercise price. See:
horizontal spread.

VERTICAL ANALYSIS

A financial analysis technique that relates key amounts on the income statement and balance sheet to a 100 percent or base figure for the present and previous year.
It shows the percentage change from last year to this year, making it easier to spot problems that require analysis.

Merger

The combination of two or more entities into a single entity, usually with one
of the original entities retaining control.

merger

Combination of two firms into one, with the acquirer assuming assets and liabilities of the target firm.

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