The steady increase in middle market transactions that we noted in our first post of 2016 may reach into the film and entertainment industry. According to a recent LA Business Journal report, Lionsgate Entertainment Group, Inc. is considering a merger with premium cable network Starz.
We all know that the movie industry is big business. This is why major movie productions can cost upwards of $200 million, because they can gross nearly $1 billion. While the numbers corresponding to blockbusters are widely known (largely because of ticket sales), how the movie theater industry does is not so well known.
As the Los Angeles International Auto Show draws car enthusiasts across many generations, car companies are hoping to gain new customers for future sales. This was the idea when Toyota Motor Company launched Scion, a brand that was designed to attract new, younger buyers and bring them to the Toyota brand.
For many businesses, deciding to merge with another company is not necessarily about the immediate financial gains. Indeed, an acquisition has to make financial sense and must ultimately benefit shareholders, but oftentimes a change to a company’s brand can be just as important.
Last week’s gains marked a positive start to an otherwise lackluster month of trading so far this year. However, the struggles of energy stocks and the recent rise of interest rates are not likely to put a damper on the pace of mergers and acquisitions in 2016.
In a number of our posts, we have suggested that the torrid pace of mergers and acquisitions could be slowed by rising interest rates in 2016. However, we must also take into consideration the role of the federal government in approving or quashing mergers that threaten to stifle competition. It remains to be seen how the Federal Trade Commission will deal with the mega merger between Pfizer and Allergan. But in the meantime, it appears to that the large merger between Office Depot and Staples is in trouble.
The process of acquiring another company and merging technologies is not an easy process. But when it is done efficiently and skillfully, it can benefit both companies as well as their employees and shareholders. A number of our posts have focused on the due diligence that M&A attorneys perform in order to advise their clients on whether an acquisition will be in the company's best interests, but this post will focus on how an acquisition agreement is crafted.
The acquisition of a business can be an exciting time; especially for the business that is being purchased. For many people who have started small businesses have dreamed of this day, and the paychecks that come with it. But before the purchase can be consummated, it is prudent to ensure that the transaction proceeds as expected, there is an expectation of due diligence. With that said, a potential acquirer of your business will want to few a number of documents surrounding your business.
Of all the stories we have highlighted this year regarding successful mergers, it is ironic that a proposed deal that ultimately did not happen would involve tuna. Nevertheless, a recent LA Times.com report described how a proposed merger between Thai Union Group and Bumblebee Foods was called off amidst concerns about how the union would harm competition in the canned tuna market.
With the forecast of mergers and acquisitions being favorable for 2016, the importance of having experienced legal counsel involved in the process from beginning to end cannot be understated. For companies unfamiliar with the process, they may underestimate the value that a law firm brings to these transactions at the outset.