In a vertical merger involving two Tennessee companies, a manufacturer of stone building products now has more control over its supply-chain process. According to the Chattanooga Times Free Press, a natural stone supplier in Dayton was purchased by Horizon Stone to expand its product lines of premier building materials. Our team at Ray Law Firm, PLLC, understands that time is of the essence for a company to capitalize on the potential of a merger opportunity.

Finding out that an essential raw-goods supplier has filed for bankruptcy protection may encourage you to enter into talks of a possible merger or acquisition. This may provide an opportunity to increase your production output while also eliminating your company’s reliance on the supplier staying in business.

After filing for bankruptcy, the stone supplier was acquired by a private equity group, which helped it to triple its sales and productivity. After the successful turnaround, the private equity group sold the supplier to Horizon Stone for an undisclosed amount.

The merger between the two stone material producers allows for an improvement in distribution channels. The newly combined company may now provide a larger number of commercial and residential builders with high-quality stone building materials. A joint operation also helps reduce expenses and improve customer service while it enables both businesses to grow through scaling.

Under certain circumstances companies may stand to benefit from merging with a raw materials or goods supplier. With uncertainty in economic factors and market conditions, having control over the supply chain process may provide greater predictability. If one of your suppliers should suddenly go out of business, scrambling to find a replacement could have serious ramifications on your own company’s bottom line.

Our page on mergers and acquisitions can provide you with more information on strategies for protecting your enterprise.