the OSS market in 2001-2007, using empirical vendor data from Dittberner Inc. on 56 mergers or acquisitions. The analysis concentrates on finding the cases where merger or acquisition was committed to strengthen current market position or to enter new L. Frank et al. segments or vertical software markets. The two latter cases are seen as indicators of increasing horizontalization. 4.1 Motivations for M&A Transactions The general rationale for mergers or acquisitions is to increase company's financial performance. Other relevant reasons include cost reductions (cf. Williamson 1975; Mueller 1980), achieving market power (cf. Stigler 1950), acquiring resources (cf. Wernerfelt 1984; Barney 1991), acquiring knowledge (cf. Grant 1996), obtaining economies of scale (cf. Stigler 1958), acquiring customer equity (Rust 2001), and managerial decisions (cf. Ansoff 1987). In the following, reasons for M&A are introduced and considered from the perspectives of both internal resources of a software vendor and competition of a vertical software market. This is elaborated through the evolution of a particular market. Consideration of the needs of compa- nies in different lifecycle phases allows us to conclude that the grounds for M&A stressed during the market developments differ. The vertical software industry evolution model (cf. chapter on "Model for Evolu- tion of a Vertical Software Industry") claims that vertical software markets are born and develop according to a common pattern. The evolution of the market in this model is characterized by (a) transition from internal software development activity to outsourcing to software vendors, and by (b) increase in the level of productization. According to the model, the software development is first initiated within vertical enterprises seeking to gain competitive advantage by automating parts of their central business processes. In order to achieve this, in the initial and so-called Innovation phase, both the vertical enterprises and hardware manufacturers for that vertical indus