7 Types of Mergers and Acquisitions (M&A) + Real Examples

When a company is deciding on a corporate development strategy, the types of acquisitions it seeks will often determine the strategy even before a long list of potential targets is developed.

DealRoom has worked with companies on every manner of deal, so we decided to provide readers with a brief overview of each type of acquisition, along with an indicative example.

The 7 Types of Mergers and Acquisitions

1. Horizontal Acquisition
2. Market Extension Acquisition
3. Vertical Acquisition
4. Conglomerate Acquisition
5. Congeneric Acquisition
6. Reverse Takeover (SPAC)
7. Acqui-hire

Below is a more in-depth look at each of the 7 M&A types, along with specific examples of each.

1. Horizontal Acquisition

Horizontal acquisitions (often called ‘horizontal mergers’) involve gaining market share through consolidation. Both companies should operate in the same space, providing similar products and services. 

The increased scale of the new company should give it greater bargaining power and a stronger competitive position than the two companies had when they were on their own. In most industries, the largest players either obtained or maintained their leadership position through horizontal acquisitions.

How does it create value?

A horizontal merger leads to greater economies of scale in the market(s) in which the company operates. It is also likely to lead to lower operating costs, as the companies can share production facilities, distribution channels, and human capital.

Horizontal Merger Example

The 1999 merger of Exxon and Mobil to create ExxonMobil could be seen as the textbook case of a horizontal merger. Two companies with the exact same output (very rare, given that all consumer products are at least a little different). 

The combined firm was the largest in the world at the time of the merger, creating an undisputed leader in the oil and gas industry and creating hundreds of millions of dollars in cost and revenue synergies.

2. Market Extension Acquisition

A market extension acquisition is a variation of a horizontal acquisition, in which the companies are in different geographic locations. Ultimately, the aim remains consolidation, but across a wider geography.

Cross-border acquisitions are the most common form of market extension, and are particularly prevalent in industries such as food retail and retail banking.

In these industries, the typically high levels of consolidation that exist incentivize new companies entering the market to undertake acquisitions rather than starting greenfield operations in the new geography.

How does it create value?

The market extension merger creates value primarily through revenue synergies. There may also be some technology synergies to be shared across the countries. Cost synergies tend to be lower here, as companies will retain most operations in each country even after the merger.

Market Extension Merger Example

In early 2022, two innovative shipbuilders, Wight Shipyard from the UK and OCEA from France, combined in an all-share merger that gave both increased access to their respective markets and enhanced resources to take on larger players. The market extension merger enabled both companies to double their size.

3. Vertical Acquisition

If a horizontal acquisition describes a company buying a competitor operating at the same level of the production chain, a vertical acquisition describes a company acquiring another at a different level of the production or value chain. A vertical acquisition occurs when a company focused on one of these areas acquires another focused on one of the others.

How does it create value?

A vertical merger creates value by lowering costs (thereby creating value) in the value chain, which can then be passed on to consumers, creating a more competitive value proposition, or to shareholders, enhancing shareholder returns.

Vertical Merger Example

In the strictest sense of the term ‘merger’, vertical mergers are extremely rare: The reality is that vertical transactions are usually acquisitions, as a much larger company buys one of its partners or suppliers, enabling it to ensure better control of its value chain. 

An example of this occurred when UK frozen food retailer Iceland acquired Loxton Foods in 2012, allowing it to gain control of one of the many producers it worked with and to bring food production in-house.

4. Conglomerate Acquisition

Our consumption patterns increasingly revolve around conglomerates, which have become experts in acquisitions. The conglomerate acquisition occurs when a large company has grown through a series of bolt-on acquisitions, usually with a diverse range of product and service lines, geographies, and industry outlooks. 

Everybody is familiar with the names of the world’s largest consumer product conglomerates, such as Procter & Gamble, Nestlé, GlaxoSmithKline, and others. When we think of their product lines, they can include anything from pet food to detergent, dairy products to frozen foods.

Related: Examples of Conglomerate Mergers

How does it create value?

The consensus now among academics is that there isn’t much value created from the merger itself - the value generation comes from each of the companies being managed well, which would have happened without the merger. It is possible that both can gain from a larger consolidated balance sheet and the greater benefits that it brings.

Conglomerate Merger Example

Amazon’s 2017 acquisition of Whole Foods Market is a classic example of a conglomerate transaction. Amazon’s core business in e-commerce, cloud computing, and digital services had little direct overlap with Whole Foods’ brick-and-mortar grocery operations. The deal represented a diversification move rather than a horizontal or vertical expansion, allowing Amazon to enter a new industry while leveraging its scale, logistics capabilities, and customer data across a fundamentally different business model.

Related: Examples of Conglomerate Mergers

5. Congeneric Acquisition

A congeneric acquisition (also referred to as a ‘concentric acquisition’ or 'product extension merger') is a twist on the horizontal acquisition. Rather than having the same product lines or service lines, the two companies involved in the deal have distinct offerings, even though they broadly serve the same market. 

This overlap between the companies creates synergies (whereby the two companies become greater than the sum of their parts). A typical example usually given by corporate finance textbooks, which exhibits this distinction in a simple fashion, is an ice-cream manufacturer buying a wafer manufacturer.

How does it create value?

The product extension merger primarily creates value through revenue synergies, although cost synergies are a secondary benefit. The principal idea for value generation here is that both companies can create significant cross-selling opportunities through the merger.

Congeneric Acquisition Example

The $90 billion all-share merger between mining firm Xstrata and commodities trader Glencore in 2012 is an interesting example of a product-extension merger. Under the deal, the players said they would create a ‘natural resources group’ that could trade the commodities as soon as they were mined. In this respect, it could also be seen as a vertical merger, in that one was upstream of the value chain of the other.

Related: Acquisition Examples

6. Reverse Takeover (SPAC)

Reverse takeovers or ´SPAC´ (Special Purpose Acquisition Company) deals have spiked over the past five years. In this form of acquisition, a private company acquires a public company with the intention of using it to go public and avoid the usually costly IPO process. 

Depending on the deal structure, a reverse takeover can also involve a public company acquiring a private company. However, the ultimate aim is always for the private company to take control of the newly merged company and for it to be publicly listed.

Reverse Takeover Example

The 2005 acquisition of US Airways by America West is a classic reverse takeover. Although US Airways was the larger and publicly listed airline, America West (a smaller, privately held carrier) emerged as the controlling entity after the transaction. 

America West’s management team assumed leadership of the combined company, and the merged airline retained the US Airways name and public listing. In substance, the deal allowed America West to become a publicly traded airline through a reverse takeover rather than pursuing a standalone IPO.

7. Acqui-hire

At a time when the biggest companies in the world are defined as much by their talent and intellectual property as their capital assets, the acqui-hire form of acquisition is a proven way for companies to ensure that they’re winning the talent race in their industry.

This is most commonly seen in the technology sector, where a shortage of programmers at the very highest levels means that the big tech companies will do almost anything to get their hands on value-adding talent - including buying their company.

Acqui-hire Acquisition Example

Facebook’s 2010 acquisition of Drop.io is a well-known acqui-hire example. 

Drop.io was a small file-sharing startup with limited commercial traction. Following the acquisition, Facebook shut down Drop.io’s product, but retained its founder and core team. Most notably, Sam Lessin, the CEO of Drop.io, joined Facebook and later held senior product leadership roles. The primary motivation behind the deal was not Drop.io’s technology or customer base, but the opportunity to bring experienced entrepreneurial and technical talent into Facebook during a period of rapid growth.

The table below breaks down the most common M&A types and how they differ in practice. It shows what each deal structure typically aims to achieve, where synergies come from, and what tends to go wrong after close.

Common Integration Challenges by Deal Type

Each acquisition type has its own integration challenges. Most are predictable, yet many still get underestimated.

Horizontal acquisitions struggle with culture first. Teams overlap, and roles get cut. Morale drops fast if decisions drag. Antitrust scrutiny can also limit how quickly systems and pricing can be combined, slowing value capture.

Vertical acquisitions introduce operational dependencies. The buyer becomes tied to internal suppliers or distribution paths that may not perform as expected. Lock-in reduces flexibility if demand shifts or costs rise.

The success of acqui-hires is driven by retention. If key people leave, the deal loses its purpose. Incentives, reporting lines, and autonomy matter more than process integration.

Conglomerate acquisitions suffer from weak strategic focus. Leadership attention spreads thin. Without a clear operating model, the acquired business drifts instead of improving.

How to Choose the Right Type of Acquisition for Your Strategy

Most companies don’t sit down and decide to pursue a specific type of acquisition. The strategy usually makes that decision for them.

1. Start with the Outcome You Want

If the goal is growth, consider horizontal or market-extension deals. These expand revenue, customers, or geography. They usually come with heavier integration work and more overlap to unwind.

If the goal is efficiency, vertical or congeneric acquisitions make more sense. These deals focus on cost control, margin improvement, or tighter operations. The value often comes from process changes, not headline growth.

If the goal is diversification, conglomerate deals enter new markets or products. These reduce dependence on one business line but increase execution risk. Management attention gets stretched fast.

2. Assess Your Risk Tolerance

Some deals look great on paper but fall apart in execution. Complex integrations, cultural mismatch, and regulatory scrutiny add real friction. The more transformative the deal, the higher the risk.

3. Consider Time-to-Value

Some acquisitions pay off quickly through cost savings or cross-selling. Others take years to justify the price. If leadership expects near-term results, that narrows the field fast.

In practice, companies don’t choose an acquisition type. They choose a strategy, and the structure follows - whether they plan it or not. 

Regulatory & Antitrust Considerations Across M&A Types

Not all acquisitions trigger the same level of regulatory attention.

Horizontal mergers face the most scrutiny. Combining direct competitors raises clear concerns around pricing power, market concentration, and customer choice. Even mid-market deals can attract regulators if the overlap is obvious.

Cross-border deals add another layer of complexity. Different countries bring different approval processes, timelines, and enforcement standards. Data privacy, labor rules, and national interest reviews often surface late if teams are not prepared.

Early due diligence reduces risk more than legal cleanup after signing. Market share analysis, customer concentration, and regulatory exposure should be reviewed before the deal structure is locked. Waiting too long limits options and slows deal progress.

Frequently Asked Questions

What are the different types of M&A?

The main types of mergers and acquisitions are horizontal, vertical, conglomerate, and market-extension deals. Each serves a unique purpose, from increasing market share to expanding supply chains or diversifying operations.

What is a horizontal merger?

A horizontal merger occurs when two companies in the same industry and at the same stage of production combine. It helps reduce competition and often creates cost advantages through shared resources.

What is a vertical merger?

A vertical merger occurs between companies at different stages of the supply chain. For example, a manufacturer may merge with a supplier to gain better control over production and pricing.

What is a conglomerate merger?

A conglomerate merger involves companies in unrelated industries. These deals aim to diversify business risk and build broader corporate portfolios.

What is a market-extension merger?

A market-extension merger happens when companies selling similar products in different regions join forces. This helps them reach new markets and grow their customer base.

What is the difference between a merger and an acquisition?

In a merger, two firms agree to form a new entity. In an acquisition, one company purchases another and assumes control of its operations, assets, and management.

Why do companies pursue mergers and acquisitions?

Companies pursue M&A deals to grow faster, gain market share, enter new regions, or access technology and talent. M&A can also improve efficiency by combining complementary strengths.

Key Takeaways

• Mergers and acquisitions come in multiple distinct forms, and each type (horizontal, vertical, conglomerate, congeneric, market extension, reverse takeover, and acqui-hire) creates value in different ways depending on whether the goal is scale, market access, supply-chain control, diversification, public listing, or talent acquisition.
• Choosing the right type of acquisition early is a strategic decision that shapes target selection, deal structure, and post-merger outcomes, making a clear understanding of M&A types critical to long-term corporate development success.

In the most basic terms, an acquisition is a transaction in which one company buys another. But as this article shows, that transaction can take many different forms and have many underlying motivations.

Understanding these will help you assess whether your corporate development strategy adequately addresses your company’s long-term goals. If you want to dive deeper, check out this video on M&A best practices:

Or talk to us at DealRoom about how we can help you in this process.

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