Would a company acquires a company that has contracts with clients that they want?

Discussion in 'Growing and Managing a Business' started by mikewelsh, Apr 17, 2013.

  1. mikewelsh

    mikewelsh
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    Would a company acquires a company that has 3 years long exclusive contracts with multiple clients that they want? Although these contracts will only generate revenue after 2nd year of the contract.
     
  2. Fergal

    Fergal
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    Yes, companies often acquire other companies because they want access to their client base. In fact I would suspect that it is one of the most common reasons, why companies acquire other companies.
     
  3. ArcSine

    ArcSine
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    Indeed, if the contracts have significant economic value, and yet are nonassignable / nontransferable (lots of reasons why that may be so), then accessing the contracts' underlying value frequently means buying the entity which is a party to the contracts. Just check the contracts' language carefully to make sure that there aren't any provisions which are triggered in the event the target company undergoes a significant ownership change.
     
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