Strong secular trends, supportive financial markets, and concerns surrounding unknown changes to upcoming tax legislation have fueled a surge of activity in the area of mergers and acquisitions (“M&A”). The trend is expected to continue as companies seek a competitive edge in a post-pandemic environment.
Starting Your M&A Process
An important first step when considering an M&A is to define your most important strategic goals and to evaluate how such M&A transactions can fit into your firm’s short- and long-term plans and objectives. For example, it may be prudent to consider whether it is in the best interest of your business to grow or protect your market share; or, you may consider if your business would benefit from acquiring new products and services areas to expand your current clientele; or, if you should access new resources to achieve economies of scale.
To properly address such questions, you should perform a thorough self-assessment and comprehensive review of the current market conditions in your industry and potential opportunities. Once you understand how an M&A transaction can positively impact your business, can you move to the next step of the process.
Considering A Mergers & Acquisitions Process?
Now, let’s review some of the most common reasons companies consider an M&A:
Value Creation - Some companies consider M&A transactions to create synergy and maximize profit amongst their business operations. When two companies combine their efforts, synergy can result through a reduction in costs and/or an increase in revenue. For example, some companies focus on such revenue synergies in connection with market expansion and enhanced research/development capabilities. Others are more interested in cost synergies that improve cost structure by creating economies of scale. Alternatively, the value of an M&A transaction can be measured by access to superior distribution, a more capable workforce, improved technology, and similar factors that can provide competitive advantages for your business.
Corporate Diversification - Other Companies seek to merge with or acquire other established entities to explore new markets, to offer new products, or to offer new services through their existing distribution channels. Diversification can be one way for you to improve long-term business prospects and reduce risk.
Acquisition of Assets - Access to new or improved technologies is a frequent M&A objective. Cost synergies can be achieved by gaining assets that are unique or would take time to develop internally and can further assist your business in alternative revenue sources that otherwise may not have been available.
Improved Financing - When two companies merge to create a single organization, the resulting business enterprise may be able to access financing opportunities that were previously unavailable to either business. Such M&A transactions may be a useful tool in the event a business is in need of restructuring (whether operationally or financially), or if a business is on the brink of insolvency.
Growth Incentives for Management and Internal Teams - Various team members, including senior management may consider entering into an M&A transaction to better fulfill the goals and objectives of their team. For example, a successful M&A transaction can result in more diversity amongst management and team members, more growth and learning opportunities, and increased compensation.
Time and again, many individuals are unsure of whether an M&A transaction will serve the best interest of their business and/or their clients. Even more importantly, formulating an M&A game plan can be considered an arduous task, which can cause great ongoing uncertainty and divert attention away from daily tasks and other responsibilities – all of which are necessary to grow your thriving business.
Choosing the Right M&A Professionals
The team of professionals at Jacko Law Group, PC can help determine whether an M&A transaction makes sense given your business plan and operations. Should you decide to move forward, the specialized legal counsel at JLG will be your trusted partner and work with you to minimize business risk throughout every phase of the M&A process.
Schedule a consultation with Jacko Law Group, PC to help clear the hurdles associated with a potential M&A transaction and let the JLG team assist you in achieving your desired business objectives. Contact us at (619) 298-2880 or visit us online jackolg.com.
Rachel C. Edwards, Esq. serves as an Attorney at Jacko Law Group, PC (“JLG”) where she supports the needs of our corporate clientele. Her invaluable experience supports their ability to provide advice in connection with a wide ...
Add a comment
- The Regulatory Considerations for M&As and Transition Planning
- Financing, Capital, and Ownership Structures
- The Essentials of a Purchase and Sale Agreement
- Starting Out: Mergers & Acquisitions
- Private Equity and Your Regulatory Compliance Counsel
- The Most Important Consideration When Starting a Business
- Starting Out: Mergers & Acquisitions – Term Sheets and Due Diligence
- Four P’s of the Breakaway and Transition Process
- Proactive Risk Mitigation
- How a Popular Index’s Lack of Risk Disclosures Resulted in a Recent $9 Million SEC Fine: Lessons Learned
- Securities and Exchange Commission (SEC)
- Transition Services
- Investment Advisers
- Private Equity
- Private Funds
- Policies and Procedures
- Due Diligence
- Regulatory Examinations
- Social Media Marketing
- California Consumer Privacy Act (CCPA)
- Aging Clients
- Advisers Act
- Virtual Currency
- Dodd-Frank Act
- Ponzi Scheme
- Office of Compliance Inspections and Examinations (OCIE)
- Securities Law
- Broker Protocol
- Form U5
- Hedge Funds
- Regulation Best Interest
- Personally Identifiable Information (PII)
- Government Shutdown
- Risk Alert
- Exchange-Traded Funds (ETFs)
- Investment Company Act
- Rule 6c
- Wells Fargo