For Illinois businesses that want to grow, mergers and acquisitions are a strong possibility. In the first half of 2018, worldwide transactions were on the rise. Compared with the same period one year before, the value of business acquisitions rose to $2.5 trillion, a 64 percent increase. There are a number of reasons why companies may be more likely to pursue buying other businesses, including a positive economy, the availability of capital and the affordability of debt.
W many companies are looking to grow through mergers, their likelihood of success remains a long shot. In one report by management consultants at KPMG, the firm noted that only up to one-third of these transactions are successful in increasing value above what it would have been without the merger. Almost 70 percent of acquisitions, on the other hand, reduce shareholder value or are value-neutral. While the immediate transaction may close successfully, there are an array of issues that can confront businesses in the process of integrating two companies. One of the most important issues that is often overlooked in the process of planning for a merger is corporate culture.
In many cases, corporate culture can define the ways in which workers relate to one another. A sudden change in corporate culture can lead employees to look for other jobs. While businesses always do in-depth studies of a target firm before proceeding to an acquisition, culture is often left out of the due diligence process.
By working with a business law attorney, a company thinking about mergers and acquisitions can help to ensure that their due diligence is complete and thorough. In addition, legal counsel can work throughout the process to negotiate terms and develop an advantageous agreement to complete the transaction.