On Bauer Business Focus – A conversation on a program bringing together investors, entrepreneurs and academic experts with Houston Public Media News 88.7 Business Reporter Andrew Schneider.
As oil prices continue to drop, there is a significant increase in companies merging together.
JLL International Director Bruce Rutherford recently stopped by Bauer Business Focus to discuss the merging of companies and the trends to be looking out for in the industry.
“As the price of oil drops, companies that are highly leveraged who have weaker balance sheets are unable to maintain their cash flows and when they are not able to maintain their cash flows at a consistent level, they have to cut back on operations,” Rutherford said. “They can’t get financing from banks to replace those cash flows. They are looking at bankruptcy.”
In order to avoid overextending themselves when making an acquisition, companies have to look at where their operations overlap geographically and in their market segments.
“Obviously a perfect merger is where one company is very strong in one area, the other company is strong in another and bringing them together brings a synergy. Where the two companies overlap in almost every area, that’s where you will see the greatest number of layoffs in order to achieve the necessary efficiency,” Rutherford added.
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