Vertical Merger

A vertical merger is a combination of two companies that operate at different stages of the production process for a specific product or service. This type of merger typically involves a company merging with its supplier or distributor, allowing for greater control over the supply chain, cost efficiencies, and improved coordination between the different stages of production or distribution. Vertical mergers differ from horizontal mergers, which involve companies at the same stage of production.

Example

A car manufacturer merges with a steel supplier, forming a vertical merger that allows the manufacturer to reduce supply chain costs and improve production efficiency.