When a company is struggling it must change and adapt or face bankruptcy. In this difficult economy, many businesses — large and small — are in this predicament. They may be unable to turn enough profit to stay afloat. For companies in this situation, an acquisition can successfully resolve their financial issues. Through an acquisition, another company can take over the struggling business. It can bring an influx of new capital, new customers and help to save jobs.
The New Jersey-based investment and market management firm Knight Capital Group Inc. is rumored to be seeking an acquisition. The company handles investments for institutions and trades currency among other financial work. According to reports released in September, the company is worth around $430 million. Knight has roughly 1,400 employees.
The report also noted that the company had a net loss of $6.30 a share, which only added to its financial worry. Last August, Knight was on the verge of bankruptcy because of an investment error that cost the company $457 million. Instead of slipping into bankruptcy, Knight was bailed out by six other investment firms. The companies gave Knight $400 million in exchange for three seats on its board and stock.
According to insiders, Knight is expected to receive proposals from other companies about potential acquisitions very soon. The negotiations will likely be kept a secret until the complex business transaction is official.
In this case, an acquisition would allow another company to expand into Knight’s business and has the potential to save jobs. However, at this time, Knight has told employees that it has enough capital to continue to operate as is.
Source: Bloomberg Businessweek, “Knight Seen Getting Acquisition Bids This Week, Person Says,” Stephanie Ruhle and Nina Mehta, Nov. 26, 2012