The buying of selling of companies is a big part of what drives Texas’ economy. While we hate to see companies leave, we know that a new acquisition is just around the corner that will bring new opportunities to its investors.
But while these acquisitions may seem easy, readers of our blog know that they are anything but. When shifting from one owner to the other, careful deals need to be made and legal documents need to be carefully drafted in order to avoid litigation down the road. That was likely the process that occurred just recently between two Texas-based companies. For these two companies though, there were a lot of things that needed to be considered before moving forward with the deals.
For Rig Runners Inc., a heavy-haul trucking company out of Houston, the prospect of being bought by a California-based portfolio company called EZE Trucking would mean a lot of changes for both companies. Although no financial terms have been disclosed at this time, both companies would need to decide on the asking price for the company. The acquisition could also mean a name change, which would mean marketing changes and further costs that both companies would be wise to consider. Because of potentially differing state laws, contracts would need to be carefully drafted to ensure that all business laws were being followed correctly.
Similar drafting processes likely took place for the Texas-based portfolio company Audax Private Equity and The CapStreet Group, which acquired Distribution International recently. Similar to the Rig Runners Inc. deal, no financial terms have been released to the media, though our readers may have already inferred that in this set of circumstances, offers would have been made by both companies in order to join together. Because Distribution International is a Canadian based manufacturing company, contracts between the companies will need to consider international business law and may have required a bit more time to draft than the domestic contract for Rig Runners.
Source: CNN Money, "Private equity deals," Dan Primack, Aug. 5, 2013