In an effort to keep its competitive edge and remain successful, a business will sometimes merge with or acquire another business. Mergers and acquisitions are common business strategies used.

The shareholders of Red River Bancshares have approved the company’s acquisition of Fidelity Bancorp Inc. Fidelity Bancorp Inc. is the holding company of Fidelity Bank, located in Baton Rouge, Louisiana. Fidelity Bank has around $126 million in assets. Red River Bank’s acquisition of Fidelity Bank will result in Red River having approximately $1.3 billion in assets. The deal will make Red River Bank one of the largest community banks in Louisiana.

While mergers and acquisitions are common strategies used to strengthen an enterprise, there are certain things that a company will want to do before it enters into this type of business transaction. Before one company acquires another company, the acquiring company will want to conduct a due diligence investigation into the merging company. The acquiring company will want to learn all it can about the merging company’s finances and operations. It will want to be aware of any contracts the merging company has entered into with other parties. The acquiring company will also want to be aware of all of the merging company’s assets, liabilities and licenses.

In any business transaction, it is important that a company get the best deal it can. While acquisitions may be a common business transaction, it is vital that the company always conduct a due diligence investigation into the merging company’s finances and operations.

Source: The Advocate, “Red River Bank ready to acquire BR’s Fidelity,” March 30, 2013