Horizontal Acquisition

DEFINITION of 'Horizontal Acquisition'

The acquisition of one company by another in the same industry. The new combined entity may be in a better competitive position than the standalone companies that were combined to form it. Horizontal acquisitions expand the capacity of the acquirer, but the basic business operations remain the same.

BREAKING DOWN 'Horizontal Acquisition'

The companies involved in a horizontal acquisition generally produce the same goods or services. In a vertical acquisition, on the other hand, the two companies would be in the same industry but at different stages of the production cycle. For example, an acquisition of one energy producer by its larger rival would be a horizontal acquisition, but the acquisition of an oil refining company by an energy producer would be a vertical acquisition.

RELATED TERMS
  1. Acquisition Financing

    The capital that is obtained for the purpose of buying another ...
  2. Acquisition Premium

    The difference between the estimated real value of a company ...
  3. Horizontal Integration

    The acquisition of additional business activities that are at ...
  4. Dilutive Acquisition

    A takeover transaction that will decrease the acquirer's earnings ...
  5. Acquisition

    A corporate action in which a company buys most, if not all, ...
  6. Accretive Acquisition

    An acquisition that will increase the acquiring company's earnings ...
Related Articles
  1. Markets

    What's an Acquisition?

    In corporate terms, an acquisition is the purchase of a company or the division of a company. Some acquisitions are paid in cash, while others are paid with a combination of cash and the acquiring ...
  2. Investing

    What Investors Can Learn From M&A Payment Methods

    How a company pays in a merger or acquisition can reveal a lot about the buyer and seller. We tell you what to look for.
  3. Investing

    What are Acquisition Costs?

    A company can recognize acquisition costs as those costs used to buy property and equipment.
  4. Investing

    What Merger And Acquisition Firms Do

    The merger or acquisition process can be intimidating. This is why merger and acquisition firms step in to facilitate the process.
  5. Financial Advisor

    Top Tips for Buying a Financial Advisory Practice

    When acquiring a new financial advisory practice, make sure that your game plan avoids these acquisition missteps.
  6. Retirement

    How The Big Boys Buy

    Learn what those in-the-know look for when acquiring a company.
  7. Investing

    What's a Horizontal Merger?

    A horizontal merger occurs when companies within the same industry merge.
  8. Investing

    Key Players In Mergers And Acquisitions

    Strategic acquisition is becoming a part of doing business. Discover the different types of investor groups involved.
  9. Investing

    What Happens To The Stock Prices Of Two Companies Involved In An Acquisition?

    When one firm buys another, the effect is predictable. The acquiring company’s stock falls in value, while the target company’s climbs.
  10. Markets

    Understanding Horizontal Integration

    Horizontal integration is the acquisition or internal creation of related businesses to a company’s current business focus.
RELATED FAQS
  1. How do I evaluate whether a company is a good acquisition candidate?

    Evaluate whether a company is a good acquisition candidate by analyzing its price, debt load, litigation and financial statements. Read Answer >>
  2. Why are the terms 'merger' and 'acquisition' always used together if they describe ...

    Learn about mergers and acquisitions and how these two corporate actions differ based on the size and participation of the ... Read Answer >>
  3. Are acquisitions only for large companies?

    Learn how mergers and acquisitions, despite what the media portrays, actually take place more often among small companies ... Read Answer >>
  4. What is the difference between a merger and an acquisition?

    Read about the legal and practical differences between a corporate merger and corporate acquisition, two terms often used ... Read Answer >>
  5. What's the difference between a merger and an acquisition?

    Learn about the difference between mergers and acquisitions. Discover what factors may encourage a company to merge or acquire ... Read Answer >>
  6. What is a tuck-in acquisition?

    A tuck-in acquisition, often referred to as a "bolt-on acquisition", is a type of acquisition in which the acquiring company ... Read Answer >>
Hot Definitions
  1. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
  2. Front Running

    The unethical practice of a broker trading an equity based on information from the analyst department before his or her clients ...
  3. After-Hours Trading - AHT

    Trading after regular trading hours on the major exchanges. The increasing popularity of electronic communication networks ...
  4. Omnibus Account

    An account between two futures merchants (brokers). It involves the transaction of individual accounts which are combined ...
  5. Weighted Average Life - WAL

    The average number of years for which each dollar of unpaid principal on a loan or mortgage remains outstanding. Once calculated, ...
  6. Real Rate Of Return

    The annual percentage return realized on an investment, which is adjusted for changes in prices due to inflation or other ...
Trading Center