How to Create Value
New Perspectives on the Modern Corporation series
Chapter 1: Basic terminology, concepts and types of M & As
In this chapter we summarize some basic terminology and concepts on M & As for developing further knowledge and understanding. We distinguish between different types of M & As, horizontal, vertical and diversified, from an economic point of view, focusing on the economic effects produced and the environmental conditions that favour a coherent and effective growth strategy. Then, we point out the differences between friendly and hostile acquisitions and the main defences used to stop the hostile takeovers. As the growth of a firm can also be carried out through internal development, a comparison between the advantages and disadvantages of M & A with internal development is presented at the end of the chapter.