Editing Mergers and acquisitions (section)

=== Types of mergers ===

From an economic point of view, business combinations can also be classified as horizontal, vertical and conglomerate mergers (or acquisitions). A '''horizontal merger''' is between two competitors in the same industry. A
'''vertical merger''' occurs when two firms combine across the value chain, such as when a firm buys a former supplier (backward integration) or a former customer (forward integration). When there is no strategic relatedness between an acquiring firm and its target, this is called a '''conglomerate merger''' (Douma & Schreuder, 2013).<ref name="academia.edu">{{cite web | url=https://www.academia.edu/93596473 | title=Economic approaches to mergers and acquisitions | date=January 2013 | last1=Schreuder | first1=Hein }}</ref>

The form of merger most often employed is a triangular merger, where the target company merges with a [[shell company]] wholly owned by the buyer, thus becoming a subsidiary of the buyer.  In a '''"forward triangular merger'''", the target company merges into the subsidiary, with the subsidiary as the surviving company of the merger; a '''"reverse triangular merger"''' is similar except that the subsidiary merges into the target company, with the target company surviving the merger.<ref name="WachtellLiptonRosenKatz2020" />

Mergers, asset purchases and equity purchases are each taxed differently, and the most beneficial structure for tax purposes is highly situation-dependent. Under the U.S. [[Internal Revenue Code]], a forward triangular merger is taxed as if the target company sold its assets to the shell company and then liquidated, them whereas a reverse triangular merger is taxed as if the target company's shareholders sold their stock in the target company to the buyer.<ref>{{cite web|last=Griffin|first=William F.|title=Tax Aspects of Corporate Mergers and Acquisitions|url=http://www.davismalm.com/UploadedDocuments/Articles/GriffinLevTaxAspectsMergersAcquisitionsUpdated.pdf|publisher=Davis Malm & D'Agostine, P.C.|access-date=19 August 2013|url-status=dead|archive-url=https://web.archive.org/web/20130511135943/http://www.davismalm.com/UploadedDocuments/Articles/GriffinLevTaxAspectsMergersAcquisitionsUpdated.pdf|archive-date=11 May 2013}}</ref>