Vertical Integration
The acquisition by a company operating in one market, of another company that is complementary to its existing business, perhaps as a supplier or user of product, for example a newspaper publishing company acquiring a paper manufacturer. See Vertical merger. |
Similar financial terms
Vertical mergerOccur between firms in different stages of production operation for many reasons: (a) avoidance of fixed costs such as heating, storage, transportation, (b) eliminate cost of searching for prices, contracting, payment collection, communication, advertising and coordination and (c) more efficient information flow and better planning for inventory. Uncertainty over input supply is avoided by backward integration which reduces to the fact that long-term contracts are difficult to write, execute, an ...
Vertical spread
Simultaneous purchase and sale of two options that differ only in their exercise price.
Vertical analysis
The process of dividing each expense item in the income statement of a given year by net sales to identify expense items that rise faster or slower than a change in sales.
Vertical acquisition
Acquisition in which the acquired firm and the acquiring firm are at different steps in the production process.
