Which of the following types of mergers is most likely to lead to diversification benefits?
A) Horizontal merger
B) Vertical merger
C) Tax free exchange
D) Conglomerate

Question

Quizplus · Accepted Answer

Conglomerate mergers involve the combination of companies from different industries or business lines, which can lead to diversification benefits. Horizontal mergers combine companies in the same industry, often leading to cost efficiencies and increased market power. Vertical mergers involve combining companies at different stages of the supply chain, which can lead to efficiencies but may not necessarily result in diversification. Tax-free exchanges do not involve the combination of companies, but rather the exchange of one company's stock for another's, in order to defer taxes.

Which of the Following Types of Mergers Is Most Likely