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.

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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 >>
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    Learn about mergers and acquisitions and how these two corporate actions differ based on the size and participation of the ... Read Answer >>
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    Read about the legal and practical differences between a corporate merger and corporate acquisition, two terms often used ... Read Answer >>
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