There are many challenges to running a business and questions that must be answered. If you have considered a merger or acquisition for your company, you may have wondered what the benefits are. To begin with, merging with another business or acquiring another business is oftentimes a sign of growth. Of course, growing your business is positive, and typically a fulfillment of a goal, for business owners and entrepreneurs.
Mergers and acquisitions can be a big step for any business. The national banking industry, for example, has seen a wave of mergers due to increased costs and competition. The consolidation activity throughout the banking industry has also had an impact on the banking industry in Louisiana. Nine banks in Louisiana have either agreed to or completed acquisitions over the past two years. The smaller banks in Louisiana that will be acquired will likely be purchased by institutions headquartered in Baton Rouge and other major Louisiana cities.
Business growth and opportunities can take many forms, including through acquisitions and mergers. An international insurance broker that has completed more than 300 acquisitions worldwide in the past 12 years has also purchased multiple well-established Baton Rouge insurance agencies. A local man who worked for the company's first Baton Rouge acquisition has now become the company's regional president. In a recent interview, the many said that not much in the way of day-to-day operations changed after the Arthur J. Gallagher & Co. purchased the company he worked for back in 1991.
Growth opportunities can be exciting, yet also complex at times, which is why understanding the process of buying a company can be important. A bank that began in Baton Rouge recently went public; the initial public offering grossed $46 million and included the issuance of 3.3 million shares. The bank began as a single branch and now has 11 locations in southern Louisiana; the company plans to open two more branches over the next two years. The corporate strategy that the company is employing moving forward is to grow in existing markets, but also to grow through the acquisition of small banks.
Business litigation is a concern for any party entering a complex business transaction which is why understanding the details of the transaction can be important. An aviation company, Landmark Aviation, recently completed its acquisition of local Ross Aviation. Ross Aviation is the owner of the Louisiana Aircraft fixed base operation which is located at the Baton Rouge metro airport. Landmark is already a fixed base operator in two airports in two other Louisiana cities. Landmark s based in a nearby state and Louisiana Aircraft acquired was acquired by Ross in 2013. The acquisition price for Landmark in this transaction was $330 million.
A thorough understanding of a business opportunity can help better ensure its success. It was recently reported that a utility company a couple of hours north of Baton Rouge received a $5 billion, unsolicited, offer from an infrastructure investor. The reports caused the utility company's stock price to rise. Stock prices for the utility company have ranged from $43.69 to $56.37 over the past year but the company is looking for $61 to $62 a share and has hired a prominent investment bank as an advisor. The utility shopped itself around last year but failed to garner the price it was looking for in any acquisition.
Acquiring new businesses is a positive step for most companies which is why it is important that acquisitions be executed properly.
Complex business transactions require careful consideration and special attention in order to avoid unwanted results. Poorly negotiated Mergers, for example, may lead to business litigation, wasted time and money, and a situation where neither party is happy with the resolution. In some instances, the merger may be disallowed from occurring. Therefore, when one considers acquiring a new business or buying a company, he should consult with an experienced business transaction attorney.
For those considering acquiring a new business or becoming business partners with another business, the potential for growth is likely one of the many benefits of the merger. Yet there are many important questions that need to be asked to ensure that the merger is a success in both the short and long term, including the potential for business litigation. Ensuring that both companies can complement or work with each other in a stable relationship is critical to ensuring the financial success of the venture. This is hopefully the case for the Louisiana Cookin' magazine and Hoffman Media.