When two California companies merge, it’s possible that they will continue to operate as separate entities. However, there are several potential benefits of opting to consolidate a recently acquired business whether you decide to fold it into an existing brand or repackage it as something new.
Improve efficiency
Consolidating operations may be ideal if you don’t want or need all the assets you acquired in a transaction. For instance, if your factory already produces enough units to meet demand, there may be little sense in keeping the other firm’s factory open. This may be especially true if you acquired a company only because it had one or two items that you felt were valuable in making your own firm better. By getting rid of what you don’t need, you can improve efficiency and cut costs.
Strengthen your brand
In some cases, sticking your own name on a recently acquired company’s restaurants, stores or other establishments is an easy way to expand its reach. It’s not uncommon for larger companies to acquire smaller brands or those that are struggling to obtain or retain goodwill with customers. In such a scenario, there is little debate as to whether or not you should consolidate a brand obtained in a merger and acquisition.
Branching out can be profitable
In some cases, acquiring brands that sell different products or services than yours does can be an effective way to improve sales or profit margins. However, it may be best to use the other brand’s name or to create a new one. This minimizes the risk that customers will be confused about what they are buying or postpone a purchase because they don’t know who they are buying it from.
If you are planning to acquire a business, it’s important to know how you will use its intellectual property. Having a plan ahead of time may make it easier to maximize the return on your investment.
