Set the stage with your fictional companies. What type of merger will it be? What benefit would it be to the buyer? How would the buyer determine if the merger would be profitable? Complete a merger analysis using the discounted cash flow analysis and show your results in the .
A horizontal merger often makes sense for all types of mergers because it offers organizations the opportunity to consolidate their operations. For instance, a merger between Coca-Cola and Pepsi counts as horizontal in nature and would eliminate competition between the two firms, thus, guaranteeing profitability for both companies by reducing operational costs through economies of scale. If they were to merge, this would affect their profitability at first because they would have to sell all their subsidiaries.