Making the decision to merge with or acquire another company is not something that business owners do lightly or on a whim. These transactions have the potential for great success or failure, so it is crucial that they be made after thorough research and consideration of what is in a company's best interests.
With all that being said, though, there are trends that affect these transactions. While not exactly fleeting, the trends can prompt shifts toward or against "traditional" thinking and often have an impact on a business owner's decisions on what to do.
For instance, the recent acquisition of Kate Spade & Co by Coach Inc illustrates a trend toward building multi-brand portfolios versus single brand companies. Analysts are seeing this trend particularly in the luxury and fashion industries. Another company, LVMH, is one that is building its portfolio by acquiring numerous high-end companies that make a variety of luxury products, from handbags to champagne.
These acquisitions serve as challenges to a market that was traditionally dominated by single-brand companies. The trend shows that there is certainly a place for diversification and multi-brand entities.
Owners have several different motivations to acquire or merge with another company, from financial instability to stagnant growth, and they have a lot to consider when it comes to these transactions. Market trends are certainly one such consideration. And while you should not make a decision based solely on what other companies are doing, certain trends can highlight solutions that are proving to be effective in a particular industry.
It can also be wise to consult an attorney who can help you understand the legal implications and logistics of business mergers or acquisitions. With careful consideration and a legal perspective, you can assess your options and make a decision that is in the best interests of your company.