Mergers and acquisitions can be an effective way to expand a business. They can consolidate resources and supply chains, cut out middle men, and allow expansion into new markets and new customer bases. While many think that mergers and acquisitions only occur at the massive corporate level, this simply isn’t the case. Small and medium-sized businesses right here in Baton Rouge engage in these business transactions all the time.
In fact, one recent report predicts that several bank mergers and acquisitions are likely to occur over the next year in Baton Rouge. One reason is that current regulations are favorable to banks and the corporate tax rate has lowered. The report indicates that more banks with less than $1 billion in assets, which makes up 86 percent of all of our country’s banks, are likely to consolidate for a number of reasons. These banks may consolidate to share extensive cyber security costs and avoid the negative consequences of few deposits and slow loan growth. Investar, which is based in Baton Rouge, is expected to lead this consolidation, given that it has already acquired three of these smaller banks in the last two years.
While mergers and acquisitions are expected to involve large national and community banks in the coming years, these business transactions will occur in every business sector. Retail, hospitality, and healthcare industries will all see businesses combining or being bought and sold to best position themselves for success in the future.
Mergers and acquisitions, while beneficial in many cases, can be risky. This is especially true when the agreements entered into are poorly negotiated and drafted. Businesses looking to expand should consider sitting down with a business law professional to determine an effective and efficient course of action.