The Role of Acquisitions, Joint Ventures, and Divestitures

Joint ventures are often a good way to become acquainted with an unfamiliar business before diving in all the way and making an acquisition partnerships are also employed and are simply another legal form for joint ventures. One can acquire the other half of the joint venture or partnership later, if it is succeeding—or divest if it is not. 

Acquisitions have played a prominent role in the evolution of the plastics industry. Many of these have been the result of the industry s small business pioneers being consolidated as the founding entrepreneurs died or wished to retire, but without having a successor. Also, some medium-sized firms found that they needed certain economies of scale in order to survive the competition from larger firms attracted to the growth and earnings potential of the industry. 

Unfortunately, a significant number of companies available for acquisition are often in financial or operational trouble. These types of firms may offer a rare opportunity to acquire a fast and easy fixer-upper at a low cost—or they may turn out to be quicksand, absorbing far more personnel, time, and financial resources than were originally contemplated to effect a turnaround. A large—and bad— acquisition has effectively destroyed more than one company. These and other considerations are explored in the following sections. 

---