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Conglomerate Merger – Meaning, Examples, Guidelines, Advantages, Disadvantages | Financial Management

Conglomerate Merger

Conglomerate Merger Meaning

A conglomerate merger involves merging two or more unrelated companies into one corporate entity. In other words, it means combining companies in various industries under one corporate umbrella.

The conglomerate merger involves merging companies with unrelated or diverse business interests, as opposed to a horizontal merger involving companies in the same industry or a vertical merger involving companies in the supply chain. Suppose a manufacturing company merges with a telecommunications company in a conglomerate merger.

As a result of a conglomerate merger, the merged entity’s business portfolio is diversified and expanded. A merged company can take advantage of economies of scale, cross-selling opportunities, resources shared, and synergies between its diverse operations by combining different businesses under one corporate umbrella.

Moreover, conglomerate mergers can reduce risk by spreading it across a variety of industries.

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