The merger is the process through which two or more independent companies are combined, deciding dissolved individually to join heritages, all this in order to increase the equity of the new person legal which was formed by extending the possibilities investment to obtain higher income in the future, for a merger to be considered successful, the value of the acquisition must be less than the present value of the cash flow, otherwise it is considered as failure.
These mergers can be classified into:
- Merger by absorption: it is so called because during the merger process the assets of the legal persons involved in said process are absorbed and the capital of the company that arises increases. The companies that were merged are dissolved, while the partners that made it up, become part of the absorbing company. Mergers by absorption are characterized by the fact that the right of the partners to separate does not exist, nor is the capital increase required for the total amount of the value of the assets acquired in the operation.
- Pure merger: occurs when two or more companies or organizations unify to give rise to a new one, these companies dissolve but there is no liquidation, this is used to unite the investment and the commercial criteria that two different organizations in the same market have.
Another classification that is used for functions is according to economic importance and competition and they are the following:
- Horizontal Merger: this occurs when two or more companies that belong to the same area of activity, decide to join, in order to increase their capital and reduce production costs, to thus obtain a greater presence in the market, which increases the ability to set prices that trap the consumer and eliminate competition.
- Conglomerate: these are those companies that do not compete or have any relationship between them, they only share central functions, such as accounting, financial control and administration.
- Vertical integration: it is defined as a partnership between a company and its supplier, in order to acquire its own raw material, it can also be the company's partnership with a client in order to have its own product.
