2 California Fashion E-Commerce Rivals In Business Merger
On behalf of The Law Office of Lynnette Ariathurai, A Professional Corporation posted in Mergers & Acquisitions on Monday, September 2, 2013.
Competition is healthy in a free market because it encourages innovation. Companies will continually improve their products and services in order to retain their share of the market. However, many times it is more profitable for competing companies to join forces, which can also spur innovation. This is what two fashion e-commerce companies have decided to do in a recent business merger in California.
The two companies, Shoedazzle and JustFab, were rivals in the fashion industry up until their recently announced merger. The two companies claim the merger will spawn the largest subscription e-commerce fashion company in the world. Although one publication had described the move as JustFab acquiring Shoedazzle, the two companies are characterizing the move more as a merger of their unique brands.
The two co-CEOs of JustFab Inc. will continue to maintain their positions, while the current president of ShoeDazzle and the company's founder will continue operating ShoeDazzle. However, one co-founder of ShoeDazzle will be joining the board of directors of JustFab. Under the newly formed business structure JustFab Inc. will manage various lifestyle brands including, ShoeDazzle, JustFab, FabKids and Fabletics.
Although the business merger in California may be exciting, it is important that the executives make sure they take all of the proper precautions. This will include drafting the correct legal documents and filing them with the proper regulating agencies. Also, all of the legal contracts should clearly state what the new roles of executives will be within the new business structure. This will help avoid future legal disputes as well as potential lawsuits.
Source: gigaom.com, Fashion e-commerce rivals JustFab and Shoedazzle announce "merger", Ki Mae Heussner, Aug. 21, 2013