Would You Consider a Merger?

It seems to be the trend these days!

• US Steel & Nippon Steel merger is facing challenges.

• Perplexity has put in a new bid to merge with TikTok.

• Spotify & UMG just made a multiyear deal on content.

Various mergers and deals continue to occur with the expectations of more deals on the way. WSJ maintains a list HERE in case you want to follow the upcoming deals more closely.

Now is a good time, as any, for businesses and individuals to understand the "why" behind mergers, acquisitions, and deals.

Core aspects of 5 main types of Mergers

1. Horizontal

   1. Usually between two competing firms.

   2. Increases market share & synergies.

   3. E.g. ConocoPhillips-Marathon Oil (May 2024)

2. Vertical

   1. Firms whose products "build" on each other.

   2. Products share a common supply chain.

   3. E.g. Home Depot-SRS Distribution (March 2024)

3. Market-Extension

   1. Similar products sold by both, in different markets.

   2. Mergers/Deals increase market reach of both.

   3. E.g. US Steel & Nippon Steel (merger in question)

4. Product-Extension

   1. Firms are in same markets with related products.

   2. Improve client access, reduce supply costs.

   3. E.g. Spotify & UMG (deal not merger)

5. Conglomerate

   1. Often unrelated products for both firms.

   2. Goal is to diversify product lines and portfolios.

   3. E.g. Perplexity & TikTok (merger or JV if it occurs)

Actionable Insights for SMBs

1. Observe mergers in industries carefully.

2. Adjust your measured metrics to improve valuation.

3. Update your SMB to be in line with new AI/DT standards.

4. Upskill your employees and audit processes to increase value.

5. Focus on improving data collection and models for your business.

P.S.: Name one thing that your business/company should do in order to be ready for a merger or deal in 2025.

Want to increase your SMB’s profits by 10-20%? My Data-Audit & Action Plan does that for you!

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