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Vertical mergers help supply chains work better

by | Oct 28, 2022 | Mergers and Acquisitions

If you run a business working in the supply chain for a common good or service, it may behoove you to learn how vertical mergers work. Vertical mergers are frequently used by business owners in New York so they can have greater control over how the supply chain works. This allows them to increase business with increased productivity and higher efficiency rates while reducing costs all along the way.

Watch out for anti-trust violations

You might want to brush up on antitrust law if you’re doing a vertical merger. It’s highly common for those who are against the merger to cite these types of violations. People might cite such violations when you’re still in the planning phase or once after you’ve already gone through with the merger. This challenge is often brought because it’s likely that the market competition will be driven down as a result of the merger.

A vertical merger is when at least two companies operating in the same supply chain merge. These mergers are used for companies that are both working towards the same end goal, this being a good or service. Such companies contribute different functions to a common supply chain, and a vertical merger provides a legally official way for the companies to work together.

Teamwork makes the dream work

With these supply chains, the sum tends to be greater than the parts. When different companies are communicating and working with one another, they can better enhance their performance, increase their potential output, and drive greater efficiency through synergy.

The advantage of vertical mergers comes from how supply chains run more smoothly when companies can work together. But if you’re considering making this potentially beneficial business move, you’ll want to do avoid antitrust problems.