Many people start a business hoping to grow and control it indefinitely, without giving much consideration to someone buying them out. However, in many cases mergers and acquisitions (M&A) are extremely profitable, often presenting the best option for the companies involved.
The finalization of Disney’s $71.3 billion 21st Century Fox acquisition could have long-reaching effects as studios struggle to compete. Meanwhile, the acquisition may provide Disney greater leveraging power in relation to box office splits. And with the addition of streaming, the company could rival Netflix. But from a financial standpoint, how does this acquisition relate to other similar business deals?
Previous entertainment buyouts
Within the entertainment industry, Marcus Loew bought three companies to form MGM. Totaling $8 million in 1920, those companies included:
- Goldwyn Pictures
- Louis B. Mayer Pictures
- Metro Pictures
As opposed to Sony’s $5 billion acquisition of MGM back in 2004, the value of Loew’s deal would likely be around $108 million currently. And while many entrepreneurs would likely welcome an offer of that size, many businesses come with an even larger price tag attached.
How much money is involved in current mergers and acquisitions?
During the first three quarters of 2018, worldwide M&A deals amounted to $3.3 trillion. Of that, the deals which involved American companies totaled $1.3 trillion, exceeding the sum of the combined deals throughout:
- Southeast Asia
- The Middle Ease
That there continues to be tremendous financial opportunity for business owners throughout the United States is an understatement. However, no matter the current state of your business, you may find it encouraging to know that possibilities may present themselves in various ways. And if another company shows interest in acquiring what you started, you might be wise to keep an open mind.