How does Mergerstat determine the four transaction types (conglomerate, financial, vertical and horizontal)?
By definition, they are as follows: • Horizontal both the target and acquirer are in the same industry and they compete directly in the same product lines or markets. This is a strategic transaction. For example when 2 banks are combining, it is horizontal because they are in the same business line. In most cases, the reason behind such transaction is to create an economies of scale • Vertical the target and acquirer are involved in different stages of the production process, such as when a manufacturer acquires a distributor. This is a strategic transaction. • Financial the acquirer is a financial buyer. The buyer may be funded by a buy-out fund or specially formed group of private investors or achieved through a leveraged buyout. The motivation is not strategic, but financial and has the backing of outside investors. Other examples would be acquisitions by public shells and Management Buy-Out deals. • Conglomerate the target and the acquirer are in completely unrelated industries suc
