When you own a profitable business and have started to think about how to bring your business to the next level, what comes to mind? Of course, there are several possibilities to consider about how to grow a business and therefore make it more profitable. One strategy is to merge with, or to possibly acquire, a competitor's business, thereby eliminating competition and becoming more profitable in one fell swoop. Where to begin on honing in on this goal depends on the business, but it will end in a contract agreement that outlines the responsibilities and obligations of all parties involved in the merger or acquisition.
Many successful businesses in Louisiana go through a merger or acquisition. However, mergers and acquisitions are complex endeavors. And, there are some steps businesses can take to make the process go smoothly.
Residents of Louisiana keeping track of the banking industry may have been surprised to hear that the U.S. Federal Reserve recently approved the acquisition of Suffolk Bancorp by People's United Financial, given that the resulting financial institution would have approximately $43 billion in assets. This move was announced alongside a policy change that could make it more likely to see such mergers and acquisitions in the future.
Most people in Louisiana these days have heard of the terms "merger" and "acquisition" in connection to business dealings, although they may not know exactly what the difference between these terms is. While the terms "merger" and "acquisition" are often used interchangeably these days, technically they are two different business transactions. A merger takes place when two separate business combine in a way that creates an entirely new business entity. The consolidated new business entity has a new owners and a new management structure.
Acquisitions are, in general, excellent expansion opportunities for any company to consider. A Baton Rouge sports store recently acquired a big league bat manufacturer in another state. The company being acquired makes custom wood bats. A representative for the Baton Rouge sports store noted the acquisition adds to both the sports company's culture and balance sheet. The sports store expects to accelerate growth of the bat making company in all product categories. Both sides, the acquiring company and company being acquired, were positive about the acquisition.
Acquiring an existing business is an opportunity for growth or even an avenue to consider for starting your own business. In either circumstance, it is important to understand what you are getting into and to be familiar with how to acquire a business. Some tips and guidance can help the business owner to conduct the acquisition.
Business acquisitions can be a good growth opportunity for businesses. Certain assets of an insurance company in a neighboring Louisiana community are being acquired by another company. The independent insurance agency with assets being acquired reportedly handles personal and commercial lines of insurance and produces annual revenues of $3 million. A representative for the acquiring company said that the growth strategies and customer focus of it and the company they are acquiring assets from are similar.
Acquisitions and mergers are often important growth opportunities for businesses. An out-of-state bank is acquiring banks in Louisiana and Florida. The total cost of acquiring all the banks in both states is $33 million. The acquisition will give the parent company $1.6 billion in assets in four states, including Louisiana.
If you are considering a merger for your business, you may wonder what the different merger options are. There are, in general, 5 different types of mergers including a conglomerate merger; a horizontal merger; a market extension merger; a vertical merger; and a product extension merger. The type of merger is determined by the economic function of the merger, the purpose of the transaction and the relationship between the two companies that are merging.
This blog recently discussed details of business mergers in Louisiana, and a recent local real estate company merger is being described as a reunion of sorts, as the smaller company now merging was part of the larger company in the 1980s. The financial details of the deal were not released. The merger will include 10 commercial real estate employees merging into the larger real estate company. However, the residential real estate side of the smaller company merging will remain independent.