BM 1.5 Growth and evolution (External Growth)

Two or more independent businesses voluntarily agree to combine to form a new, single legal entity, benefiting from operating on a larger scale.

• Merger

• Acquisition

• Takeover

• Joint venture

When one company buys a controlling interest in another company by purchasing enough shares in the company to acquire a majority stake.

• Merger

• Acquisition

• Takeover

• Franchising

A manufacturer buying a retailer.

• Horizontal M&A

• Forward vertical M&A

• Backward vertical M&A

• Conglomerate

When one company buys a controlling interest in another company but usually done in a hostile way as they occur against the wishes of the owners of the target company.

• M&A

• Takeover

• Joint Venture

• Strategic Alliance

State one advantage of M&A.

An arrangement between two or more separate parties, to pool their resources together to form a new legal entity, for a finite period of time.

• Merger

• Acquisition

• Joint Venture

• Strategic Alliance

State one disadvantage of JV.

When two or more businesses join forces to benefit from growth without having to set up a new separate entity or to make any fundamental changes to their own business models.

• M&A

• Takeover

• JV

• SA

State one advantage of SA.

An agreement between a business (franchisor) that gives the legal rights to other organizations (franchisees) to sell products under the franchisor's brand name or trademarks.

• M&A

• Takeover

• SA

• Franchising