vertical acquisition

Discipline: Economics

The act of one business acquiring another whose production line is predecing or succeeding its own.

If Firm A buys raw materials, and produces unfinished products, and Firm B buys the same kind of unfinished products, and produces finished products, then the acquisition of any of the two firms by the other would be a vertical acquisition.

The objectives of vertical acquisitions include reducing costs, and decreasing reliance on vendors or buyers.

Unlike vertical mergers, vertical acquisitions do not necessarily involve two companies merging together, and becoming one entity.

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