There are a number of ways that businesses can expand their operations. Amongst these options are mergers and acquisitions. These business tactics can be beneficial not only for a business that is looking to reduce costs and expand operations, but also for those businesses that are looking to consolidate or exit the market with significant profits in their pockets.
Acquisitions can take many forms, too. One of the most common types is a straight takeover, where one business essentially buys out the other and takes over its operations. This may occur through the purchase of stock or a cash offer to a business owner when stocks aren’t involved. Through this type of takeover, the acquiring business will end up possessing everything owned by the acquired company, including debts.
An acquisition doesn’t have to include an entire business, though. For example, a business can pursue an acquisition of assets. This process often occurs when a business is going through bankruptcy and is seeking to liquidate its assets so that it can repay debt. Here, the acquiring business simply buys those assets without agreeing to take on any other part of the business. Management acquisitions can occur, too. Here, a business’s management buys a controlling stake in the business, thereby making it private in nature if it isn’t already private.
Mergers and acquisitions can be powerful strategies to secure new markets, reduce costs, and shorten supply chains. It can also allow business owners to exit business or transition to a new role as part of a new business. The process of merging with or acquiring a business can be complicated, though, which is why it is often best to secure the assistance of an experienced business law professional when trying to navigate these matters.