Mergers and acquisitions are a great way to expand a business and increase profitability. Buying another business or merging with it can reduce costs and expand client base. Of course, there’s also some risk involved with each of these processes.
To start with, they can be costly. Merging companies can be a logistical nightmare, while acquisitions may require extensive payments in cash and stock. Additionally, not all mergers and acquisitions are successful. Sometimes, businesses see decreased profits when these business moves don’t pan out. That’s why it is important to carefully analyze these business arrangements before moving forward, and then only doing so with an attorney who can ensure that the transaction is carried out in a favorable way.
This appears to be happening in the oil industry right now. Chevron recently acquired Anadarko for $33 billion. To complete the acquisition, Chevron offered nearly $61 per Anadarko share. The move by Chevron positions it well for an increase in shale oil, natural gas and deep-water production. This is a big move for the company given that it is relatively new to the shale industry.
Many experts think that the Chevron deal has set the stage for more mergers and acquisitions in the oil industry. So far this year, the industry has seen $200 billion worth of merger and acquisition deals. In fact, shares of other shale oil producers soared after Chevron’s acquisition of Anadarko on speculation that more business dealings are on the way.
Pursuing a merger or acquisition can be a strong business and financial move. However, there are risks, especially when the deal isn’t negotiated properly and the terms of the deal are one-sided. This is why Louisiana businesses need to think about working with a qualified business law attorney before pursuing one of these business transactions.