What is Merger?

A merger is a business combination in which two companies join together to form a single, unified entity - often to increase market share, reduce competition, or improve efficiency.

Mergers can be structured as horizontal (between competitors), vertical (between supplier and buyer), or conglomerate (between unrelated businesses). In most cases, the merged entity adopts a new name or continues under one of the original brands.

Unlike acquisitions, where one company absorbs another, a merger is typically positioned as a mutual decision between equals, although in practice, one party often has more influence.

Example

"The merger between the two fintech startups helped them consolidate operations, cut costs, and expand into the European market faster."

How is Merger used in business?

In business, mergers are a strategic move to unlock growth, streamline operations, and create synergies. By combining resources, companies can achieve economies of scale, expand into new markets, or strengthen their competitive position.

Mergers are common in industries like finance, healthcare, and telecom, where consolidation often leads to greater profitability and shareholder value. They can also be driven by tax strategies or the desire to acquire intellectual property.

A successful merger depends on cultural alignment, operational integration, and regulatory approval.

Pro Tip

Not all mergers are beneficial. Conduct due diligence, especially around financials, legal liabilities, and team fit - poor integration can destroy value quickly.