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What is a vertical business combination?

A vertical business combination occurs when a company acquires another company that is in the same vertical or industry, however, the company operates in a different stage of the supply chain. If a company acquired a company in the same vertical and same stage of the supply chain, then that would be a horizontal business combination.

For example, if the company sold burgers, and they acquired a company that was a supplier of burger meat, then that would be considered a vertical combination. Vertical integration allows for companies to achieve cost savings because they are no longer paying a markup on a product that they need to purchase.

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