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The Urge to Merge: What You Should Know About Mergers & Acquisitions

Merger and acquisition opportunities arise for Florida businesses under many different circumstances, but combining your company with another is not an easy decision. There are many factors to consider, especially your long-term objectives, and the strategies and resources you need to achieve them. Plus, you may not be alone in making these important determinations: A whole new set of executives, managers, and personnel come along when you combine forces with another company, further complicating your intended outcomes. You should definitely consult with a Florida business lawyer regarding pros and cons for your business, but you can also learn a lot by reviewing some recent successes and failures.

Success Stories in Mergers and Acquisitions

  • Disney-Pixar: These two family-focused media companies were a logical match when Disney acquired Pixar in 2006. Disney had already released all of Pixar’s movies, but the contract for their collaboration was about to run out. Instead of letting it expire, the two companies joined forces to create such blockbusters as Wall-E, Up, Brave, and Frozen. The $7.4 billion price tag paid off quickly.
  • Sirius-XM Radio: The merger of these two satellite radio providers, demonstrates how one-time competitors can join up to achieve enormous business success. The only snag was a barrier created by the FCC back in 1997, preventing license holders from acquiring each other. After reviewing the planned combination, the FCC granted approval in July 2008.

Mergers and Acquisitions Failures

  • Quaker-Snapple: Within just a few months after Quaker acquired Snapple for $1.7 billion in 1994, it became blatantly obvious that the company did not fully understand the flavored tea producer’s following. The efforts to put Snapple in every grocery conglomerate failed to reach the brand’s foundational audience, who were shopping smaller, independent stores. The combination lasted 27 months before Quaker let Snapple go.
  • AOL-Time Warner: Many experts thought this 2001 merger of new and old media would be a hit in the age of the internet, but the factors that brought initial success soon led to the AOL-Time Warner downfall. The two companies’ cultures were incompatible, and the phase-out of dial-up internet let to a separation of their respective interests in 2009.

Be a Success Story

Financial considerations are a primary motivator behind mergers and acquisitions, which means a business valuation will be critical. In doing so it is essential to:

  • Get a firm grasp on how much money you can make in the new venture;
  • Place proper emphasis on profits;
  • Maintain appropriate control over working capital; and,
  • Place a realistic value on your business.

Beyond financial factors, you should also consider the human components of a merger or acquisition, such as the new personnel coming in and the impact of the arrangement on your existing employees.

Consult with a Pinellas County Business Lawyer Regarding Mergers and Acquisitions

If you are a Clearwater business owner considering a new venture with another company, please contact the mergers and acquisitions attorneys at Clearwater Business Law. We can review your circumstances, and offer knowledgeable advice and counsel about the legal aspects of the process.  Please contact us at (727) 785-5100 to schedule a free consultation.