More Disadvantages of Horizontal Integration
Jaap de Jonge, Management Consultant, Netherlands
Other disadvantages could be: - Lower total value. M&A attempts quite often decrease value to the companies or fail altogether because the expected synergies never materialize.
- Legal repercussions. Horizontal integration can lead to a monopoly or very powerful competitive position, which is highly discouraged by both national governments and international organizations like the EU due to lack of competition and associated innovation. Often, these legal entities require previous approval any larger M&A before it can happen.
- Reduced flexibility. Large organizations are harder to manage and they typically are less flexible in introducing innovations to the market.