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Louisiana Farm Bureau merger could boost company's bottom line

Mergers and acquisitions are undoubtedly complicated ordeals, and the recent news on Louisiana Farm Bureau Mutual Insurance Co.'s merger with Arkansas Farm Bureau, Colorado Farm Bureau Mutual Insurance Co. and the South Carolina Farm Bureau Mutual Insurance Co. only provides more proof. While the goal of the merger is to create a larger and more flexible company, there are some bumps along the way: the Arkansas Farm Bureau's financial strength rating has been downgraded by a credit ratings agency. As for the Louisiana Farm Bureau, its rating remained the same.

The reasons for the downgrade are likely the company's recent business performance, which has been damaged by weather and depleted surpluses. However, there is some good news to be had: the financial strength of the Louisiana Farm Bureau is predicted to increase as a result of the merger.

This story emphasizes both the good and bad elements of merging with or acquiring a new company. While combining resources with another business may provide new opportunities that were unavailable before, it may also mean inheriting new problems. This eventuality must be planned for and a full understanding of any company's potential pros and cons must be carefully weighed before making any decisions.

Issues such as a company's recent performance might not be the only issues to come into account. For instance, differences in companies' work methods and corporate culture might interfere with the future success of any merger or acquisition.

For those who are considering acquiring or merging their company with another, consulting with an experienced business lawyer may provide insight into the process that could help avoid any future calamities.

Source: Insurance Journal, "Ark. Farm Bureau Ratings Lowered; Louisiana Farm Bureau Affirmed," May 11, 2012

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