The Texarkana pharmaceutical business Humco recently announced a merger with the global drug company Fagron Group. The deal, as reported by the Texarkana Gazette, is worth an estimated $70 million and is said to result in Fagron investing in the existing Humco group, with Humco continuing operations in Texarkana.
The deal provides a number of lessons for Texas businesses considering a merger and acquisition deal. Three examples include:
- Review business strategy. Before searching out a merger and acquisition deal, get a firm grasp of your business strategy. In this case, Humco was looking to expand its customer base for pharmaceutical products. Fagron provides these products to hospitals, clinics and patients at a global level while Humco primarily services pharmaceutical companies. The deal helps meet this goal.
- The importance of due diligence. Due diligence is extremely important prior to moving forward with a merger and acquisition deal. It includes a number of issues, such as the review of financial statements, liabilities and capital as well as the intellectual property, existing contracts and customer base.
- Allow for transparency. A certain amount of transparency can help smooth the transition during a merger and acquisition deal. Humco’s deal includes clear instructions on the transition of employees upon completion of the merger. It outlines how executives will transfer and specifically states which individual will be in which role. This allows for transparency during the deal and can help ease any concerns that employees have while the merger and acquisition deal is in the works.
Humco has deep roots in Texas. The company started in 1908 under the name Hutchison Medicine Co and became Humco in the 1950s. Humco plans to use this deal to expand its reach globally while retaining these local roots.