Mergers and acquisitions are a strategy for growth in this fast moving, competitive economy. Are you looking for a new strategy to increase business opportunities in the midst of national and international business and market changes? What is an effective strategy to expand into a new geographic or vertical market?
Expand Your Company and Increase Your Profitability
One of the fastest and most proven strategies for expanding your company and increasing profitability is to purchase the assets of a competitor or the acquisition of an entire company through a stock purchase to expand your capabilities, support, distribution and market reach. However, the same reasons why mergers and acquisitions are a strategy for growth are also the reasons many of these transactions fail.
The Harvard Business Review: 70% to 85% of Business Acquisitions Fail
In a recent article the Harvard Business Review stated the vast majority of large university studies showed business acquisitions have a 70% to 85% failure rate. The study noted several factors including a lack of sufficient due diligence, valuation inaccuracies and the inability to combine the corporate cultures of separate companies into a single entity.
What?! After 40 years of experience in mergers and acquisitions here in San Diego and Southern California I can tell you the vast majority of the Watkins Firm’s M & A transactions have been tremendously successful. How are we setting our clients up for success? Our extensive proprietary library of due diligence checklists, letters of intent and transactional contracts are battle-tested in hundreds of successful transactions. We protect the interests of our clients, pure and simple. Mergers and acquisitions are a strategy for growth but the transaction must be properly structured, thoroughly investigated, accurately valued and well documented. From the Letter of Intent to the moment the transition begins to take place and in the months that follow a well-structured transaction guides the parties while protecting their interests.
Asset Purchase or Stock Purchase?
Is this going to be an asset purchase or a stock purchase? An asset purchase agreement allows you to acquire the specific assets, intellectual property, customers, inventory, real estate or other business assets required to accomplish your goals. A stock purchase allows the buyer to “step into the shoes of the seller.” This can be an important distinction in many instances, such as when the target of the acquisition has government contracts you wish to keep in place.
The experienced mergers and acquisitions attorneys at the Watkins Firm have guided hundreds of companies over more than four decades here in San Diego and Southern California as they acquired a portion or all of the assets of another company or competitor, or a portion of a large corporation that is divesting a business division that is not in harmony with their primary business focus. A well-structured asset purchase or stock purchase transaction will include extensive due diligence to ensure the quality, value and condition of the assets to be acquired and a smooth transition from the seller to the new buyer.
Our experienced business general counsel can guide you through the process of identifying potential candidates, negotiating a sound asset or stock purchase and developing a strong Letter of Intent. If you are selling, we help you to prepare the company at all levels for acquisition and prepare supporting documentation and contracts to ensure a smooth transaction.
Risks are offset through effective investigation and diligence, and a well-crafted acquisition agreement. We are cautious to protect our clients from any unexpected liabilities or contingent exposures that might arise from the acquisition. What heights could you reach with additional equipment, more customers, expanded facilities, complimentary products and intellectual property? What impact would this have on your bottom line going forward?
Mergers and acquisitions are a strategy for growth and expanding into new geographical and vertical markets. If you are interested in a proven process and proprietary library of checklists and contracts that are battle tested and well proven we invite you to review our Podcast Episode 13 – Mergers and Acquisitions as well as the strong recommendations of our clients and contact the Watkins Firm or call 858-535-1511 for a complimentary consultation today.
