Considering Buying Another Company – Business Acquisitions
Companies should engage in business acquisition only when it makes strategic and business sense. From our experience, there are a number of factors that motivate companies to acquire other companies.
Some common reasons for business acquisition include:
i. Synegy. This refers to the ability of two of more entities to generate greater value working together than they could working apart. For instance, increase in revenue and or reduction in costs. In considering business acquisition, an evaluation of whether the acquisition will lead to synergies is often a critical factor in deciding whether to acquire another business.
ii. Diversification. This refers to the concept of expanding the business offering or product line in order to manage the overall risk of the company by reducing the impact of a particular business unit, product or offering. Under this scenario, a company may look to acquire another company in a different industry or with different product lines for the purpose of minimizing the company’s dependence on its original product line or offering.
iii. Growth refers to the ability to grow the company and gain market share simply by acquiring the target company.
iv. Vertical Integration refers to gaining control of a key supplier, product or service that the company depends upon. By buying out one of its suppliers, a company may be able to generate cost savings and drive greater efficiency.
v. Eliminate Competition refers to the idea of eliminating future competition and gaining greater market share by buying up the competition.
Houston Business Attorneys | Houston Mergers and Acquisition Lawyers for Small Businesses
The Houston based business lawyers at AnunobiLaw PLLC offer a number of services and solutions to assist small and medium sized companies contemplating mergers, acquisition and business divestiture. Our business attorneys are skilled at conducting comprehensive due diligence and risk management services to help set reasonable and fact-based expectations. Business acquisitions can yield very positive outcome for the company if done right however, it can also result in devastating financial outcome if not properly executed. It is therefore critical to engage the services of competent business attorneys to assist and maximize your chance of executing a successful business acquisition.
Our business lawyers assist clients with business acquisition and related services all over Texas, but practice primarily in Harris County, Fort Bend County, Montgomery County, Houston, Sugar Land, The Woodlands, and Katy.