Vertical and horizontal consolidation are terms used to describe how businesses typically grow over time. Vertical consolidation occurs when a company acquires other businesses within the same industry, while horizontal consolidation is the acquisition of companies in related, but different industries. Both strategies allow firms to achieve economies of scale, decrease competition, lock in suppliers, increase market share and leverage complementary product lines. However, each approach has its risks, so it’s important for businesses to consider the most effective way to grow before making an investment.