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This week, Alaska Airlines announced that it would purchase Virgin America for $2.6 billion, which has you thinking: Is this a good way to grow a business?
You'd like to expand your operation and are considering an acquisition but you're not sure how to approach it ... or even if that is such a good idea. So, let's consider buying an existing business in light of the big deal announced this week.
Virgin America's stock rose 40 percent this week on the news that it was being bought, according to CNN Money. But the founder, billionaire Richard Branson, is anything but enthusiastic about the takeover despite this. Branson launched Virgin America in 2007 and it went public in 2014.
"I would be lying if I didn't admit sadness that our wonderful airline is merging with another," Branson said on Monday. He was unable to stop the takeover because not all of his shares in the company are voting shares.
What does this billionaire's concerns have to do with you? Well, his response is indicative of some of the obstacles you might face if you try to take over an existing company. Resistance is inevitable (even if futile).
Branson's protests are evidence of the fact that business is about more than just money. People respond emotionally to the notion of their creations being controlled by another. This is important to keep in mind when looking for a business to acquire.
Taking over an existing business can create resentments and resistance in your existing workforce and the people for whom you will be responsible if you do make a deal. It is critical to consider in advance every aspect of a deal and to present an offer that recognizes the fact that a sale will impact many people.
Setting the right tone at the start of negotiations is important. You don't want to fight so hard for a deal that by the time it goes through everyone wishes they had never met you. A merger of two businesses is like a marriage. Things will go much better if you meet the other family and make an effort to understand its individual members.
Before making any bold moves, do you know the goal of your takeover? Alaska Air Group knew what it wanted in acquiring Virgin America, for example. "Our goal is to be the premier airline for people along the West Coast," Alaska CEO Brad Tilden told investors on a call Monday morning, according to ABC News.
If you are consider acquiring an existing business or otherwise expanding your own, speak to a lawyer. Get guidance on regulations and compliance requirements, and get help formulating an action plan that will accomplish your goals.
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