What is a horizontal business combination?
If a company purchases another company in the same industry and stage of the supply chain, then the acquisition is considered a horizontal business combination. A horizontal business combination allows a company to increase their market share within the same vertical and stage of the supply chain. If the acquired company is in the same vertical but a different part of the supply chain, that is referred to as a vertical business combination.
For example, if Joey’s Burger Shack acquired Matt’s Burger Shack, the primary for this would be to increase the number of locations and presumably the market share. Their might be other reasons, but since both companies operate in the same vertical and same stage of the supply chain, it would be considered a horizontal combination.
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