Framework

Types of M&A by relatedness

The question it answers

When a leadership team is weighing an acquisition or merger, is the target's business related enough to its own to create real synergy?

Origin
Rumelt, 1982
Diagram type
Comparison table
Level of analysis
Firm
Topics
Strategy & leadership
Chess knight on a glass compass, icon for strategy and leadership

Diagram

Types of M&A by relatedness

CriterionMeaningValue expectation
VerticalSupplier or customerSynergy along the chain
HorizontalCompetitorsScale and share
Product extensionComplementary productsCross-selling
Market extensionSame product, new marketNew market access
ConglomerateUnrelatedLittle synergy, mainly capital diversification

Pitfalls

Pitfall

Claims that most mergers fail (often quoted as 70 to 90 per cent) usually come without a source; treat that figure with caution.

Sources

References

Listed A–Z by author surname, Harvard style. A source with a DOI links to https://doi.org/…; one without links to its page or says plainly that it has no DOI.

  1. Lebedev, S. et al. (2015) ‘Mergers and acquisitions in and out of emerging economies’, Journal of World Business, 50(4), pp. 651–662.doi:10.1016/j.jwb.2014.09.003Source page
  2. Rumelt, R.P. (1982) ‘Diversification strategy and profitability’, Strategic Management Journal, 3(4), pp. 359–369.doi:10.1002/smj.4250030407Source page