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.
Recently, a large Baton Rouge equipment rental agency landed a contracts deal to acquire a similar company in a whopping $1.2 billion deal. Lots of pieces have been and will continue to fall into place for both the company who is acquiring and the company who has been acquired. Since it's a public company, the acquisition will include clauses that determine what will happen with the stock after the deal is done. There are several steps that need to be taken including anti-trust clearance due to the size and nature of the acquisition.
The Baton Rouge's acquiring company's chief executive officer commented on the acquisition, stating that it furthers their goal of expanding their footprint nationwide. Meanwhile, the acquired company's CEO is also looking forward to the deal and personally thanked his thousand-plus employees for their hard work. The impact of this acquisition is massive, with which the acquiring company estimates the acquisition will create $25 to $30 million of synergies annually related to corporate overhead, systems and operational efficiencies, as well as scale benefits for equipment purchases.
Naturally, all of these assets have real-values associated with them, not to mention any debts the acquired company is passing on to its new owner. These details and tax obligations will need be hammered out in an agreement where both sides present their financial situations to ensure a smooth and seamless transition. Counsel will likely be sought to represent each company's best interests during this time of change.
Source: rermag.com, "H&E Equipment Services Agrees to Acquire Neff Corp. in $1.2 Billion Deal," Michael Roth, July 14, 2017