What term describes two or more businesses merging to form a single company?

• A. External Growth
• B. Mergers
• C. Horizontal Integration
• D. Stock

Answer: (B)

When two or more businesses join together to become one company, that is a merger. It describes the act of combining to form a single entity, which is a way a business can grow by integrating another firm rather than expanding from within. External growth is the broader idea of growing by merging with or acquiring other firms, but the question asks for the specific term for the act of forming one company. Horizontal integration is a type of merger where firms in the same industry at the same production stage merge, but the general term for the act itself is merger. Stock refers to shares and ownership, not the act of combining into one company.