See: Roll Up.
A roll-up is really more of a series of acquisitions than a merger. Acquisition = Buying Stuff (usually with cash, but sometimes with stock).
So now think about buying things, or rolling them up, where the targets are about the same size as the acquiror. That's where the notion of a roll-up merger comes in. You're kind of buying, kind of merging a series of companies together for some logical reason.
Like...if you could buy all the hotels in a given 40-mile strip of highway, and then raise prices on all of them 20% (and not get regulated), you could take profit margins and revenues up so much that it'll have been worth the various frictions you undertook in buying the various targets you hit. You'll have diluted yourself in issuing stock for some of the purchases, but at least notionally, the "one plus one" event of this roll-up merger will have been way more than two.
See: Synergy (albeit skeptically).
Related or Semi-related Video
Finance: What is a road show?4 Views
Finance a la shmoop... what is a roadshow? think about the rhymes IPO Roadshow....
but the two terms are lines from a sweet sweet poem if you're an investment banker as part [Poem of investment banking book appears]
of your firms job you'll take management of whatever company is going public or
raising capital in whatever form on what is called a roadshow, they'll go on the
road traveling all over the country and all around the world like they're a
vaudeville act singing crazy songs and showing men in dresses and wearing hats [Man in a pink dress and a blonde wig]
that was a thing back then that was entertainment sorry, just keeping it
real with the sales people banging a drum [Boy walking in the woods banging a drum]
about how awesome this new hair growth formula is they'll attract investors on
their Roadshow from all over the country maybe all over the world and they'll
point out how much need there is for hair around the world..
Yeah and they'll also bang a [Dwayne Johnson appears from a door]
tambourine and sing about how much the stock could go up next the next few
years yeah they'll do that and there's a PowerPoint presentation deck on this
road show lots of numbers traded among financial analysts for stock brokers and
money managers analysts to all chew on and that Roadshow continues almost like [Hilary Clinton and Donald Trump on stage]
an election with a final tally on the day the shares are placed and the cash
changes hands and a new public company is born...
let's just hope someone remembered to you know pack the diapers
Up Next
What are the economics of a good merger? The economics of a good merger need to show how profits and benefits will outweigh costs. A good merger wi...
What is the difference between a Horizontal and a Vertical Merger? Horizontal mergers happen when two companies within the same industry decide to...