A primary goal of every business is to be successful. In order to achieve success, companies use different business strategies. Mergers and acquisitions are common business strategies used.
Investar Bank, a company based in Baton Rouge, Louisiana, is making plans to acquire First Community Bank. First Community Bank is a $107 million asset. While the terms of the agreement have yet to be disclosed, Investar Bank says that it expects the acquisition to close in the second quarter. The agreement will increase the number of Investar Bank locations in the surrounding New Orleans area from seven to nine.
While an acquisition is a common business transaction, before companies enter into such an agreement, it is important that the acquiring company carry out a due diligence investigation of the target company. In addition to looking into the target company’s finances, the acquiring company will want to know all it can about the target company. The acquiring company will also want to be aware of any and all contracts, licenses, permits and assets of the target company.
Sometimes a business will acquire another business to strengthen its enterprise. It is, however, vital that before one company acquires another company, the acquiring company learn all it can about the target company to ensure the acquisition will be as fruitful as the acquiring company believes it can be. Here, while the acquisition of First Community Bank will result in Investar Bank acquiring a $107 million asset, Investar likely looked beyond this figure in making its decision and conducted a due diligence investigation into First Community Bank’s business operations and finances to ensure the decision was a sound one.
Source: The Republic, “Investar Bank plans to acquire $107 million asset First Community Bank in Hammond,” Jan. 28, 2013