Fort Worth business law attorney, Richard “Ric” Armstrong, discusses the fascinating results when Texas small businesses evolve into larger ones through mergers or acquisitions.
When they are accomplished correctly—and between the right businesses—mergers and acquisitions can provide a fast track to growth. Small businesses suddenly become medium sized businesses facing a whole new exciting (and sometimes daunting) set of dynamics. Let’s begin our discussion by going over some of the positive results that can occur when M&A occurs successfully.
Rapid Growth, Both in Size and Revenue
If two equally sized companies merge, the new entity effectively doubles in size—meaning twice the customer base, twice the assets and twice the revenue. If a larger company acquires a smaller one and handles their new assets wisely, it can likewise cause skyrocketing growth. One of the best positive effects of M&A is that companies grow much faster than they would by organic growth alone (a dynamic called “merger growth”).
Reduction or Weakening of Competition
If you merge your company with a competing company, you immediately have fewer competitors in the field—and you are armed with greater resources to compete with those left in the field. In similar fashion, if a business goes up for sale and you acquire it before one of your competitors does, you now have an immediate advantage and an increased ability to dominate in your vertical.
Acquiring New Market Strengths Through Synergy
Successful mergers typically involve two companies that have differing and/or complementary strengths, often enhanced by a new set of employees with honed skills and specialties. Not only do both companies shore up their weak spots in the process, but the new entity may have a broader market reach or the ability to offer their customers a broader palette of services or products.
No matter how promising a merger or acquisition deal may appear, you should always work with an experienced Dallas/Fort Worth business law attorney to make sure your bases are covered. For assistance with an M&A or other business law needs, call Armstrong The Law Firm, P.C., today at 972-424-L-A-W-S (5297).