The Law Office of Lynnette Ariathurai A Professional Corporation

Hospital begins negotiations for business merger

Businesses should always be prepared for the worst. Many times companies will wait until they are in dire straits before making moves to address certain problems. For some in California and other states, the solution is a business merger. One hospital has decided to not wait until it faces dire financial straits before it begins negotiations on a possible merger.

The hospital is now looking to partner with another firm from out of state in a precautionary effort. Hospital administrators recognize that the hospital will not be able to continue operating in its current business environment. Much of this is due to the small size of the private hospital. Merging with a larger entity could give the hospital the necessary resources to operate effectively in its current market.

The small private hospital contacted four larger out-of-state hospitals regarding their possible interest in a merger. Two of the four larger hospitals decided to make proposals. The small hospital's board had voted to move forward with discussions with one of the two larger hospital companies that had made proposals. The discussions will be exclusive to the chosen larger hospital and will only be the initial phase in a long-term process.

On the other hand, in order for any business merger to be successful in California or any other state, there must be a thorough business plan to guide the implementation of the merger. Also, it is important to follow the correct legal procedure, which means submitting proper legal documents to the relevant governmental agencies. Additionally, one should be sure the business plan complies with any applicable rules and regulations.

Source: Providence Journal, South County Hospital in merger talks, Felice J. Freyer, Feb. 27, 2014

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