How to Create Value
New Perspectives on the Modern Corporation series
Chapter 5: Horizontal M & As
A horizontal M & A strategy is a course of action directed at increasing production capacity and sales, while continuing to produce the same basic product. The target firm can operate in the existing market of the acquiring firm or in different geographical markets as well as in markets characterized by different types and models of the same products. Horizontal M & As differ according to the objectives pursued and the different size of the capacity jumps. In this chapter we will analyse the conditions necessary for a horizontal M & A strategy to create value; the relevant variables are also analysed in their fundamental relations through a quantitative model, in order to offer a useful guide for decision making.
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