Mergers and Acquisitions = Horizontal Integration

Hello,

Is it me (obviously English not my first language) that backward integration is described as ahead in the supply chain? :wink:

Backward integration is moving backwards in the supply chain: A banana distributor buys a banana farm

Forward integration is moving forwards in the supply chain: A banana distributor buys a smoothie shop

Backward integration: further away from customer

Forward integration: closer to the customer

Pretty sure it’s the other way around. See Q#1, National Plastics.

The entity moving “backwards” is the target/aquiree firm. The aquirer pulls the target back, further away from the consumer. In your hypo, a backward integration would be the banana farm (further from consumer) acquiring a banana distributor (closer to consumer)

It’s 100% not the other way around. From CFAI curriculum:

An example of backward integration is if a steel manufacturer purchases an iron ore mining company. When an acquirer purchases a company that is further down the value chain (a distributor), it is called forward integration. An example of forward integration is Merck & Co.’s 1993 acquisition of Medco Containment Services, a marketer of discount prescription medicines. The merger brought together the production and distribution of pharmaceuticals into one integrated company.

This would be a backwards interpretation.

Yep, apologies. I misread