Acquisitions and Mergers are Becoming a Problem for Small Businesses in Florida
Acquisitions and mergers have been a part of our daily lives for quite a while now, we just don’t really notice them until they truly get out of hand. To simplify the problem, consider this example. Imagine that you have your favorite ice cream brand in Orlando called “X,” but you try other brands just to find out which is was favorite. When tasting, you found out that brand “Y” from Jacksonville is your least favorite because the company uses chemicals, way too much sugar and overall bad ingredients.
One day you buy a box of your favorite ice cream from Orlando, but the moment you take a bite, you immediately taste the difference. There are chemicals in it, it’s a lot sweeter, and the packaging is different. Turns out that the company from Jacksonville decided to move into Orlando and bought or merged with “X.” They then convinced your favorite brand that using chemicals and sugar is a great way to cut costs. Not only did you lose your favorite ice cream brand, but it basically turned into your most hated one. Now you have to go all the way to Tampa to get your second favorite Ice Cream from company “Z.”
This type of business is completely legal in Southern states like Florida and has been for decades, but there are some rules to it.
The rule that usually focuses on acquisitions and mergers is called the antitrust law, and it is on a federal level. What this means is that every time a company decides to buy or merge with another one, they have to get permission from the local government first. Unfortunately, the government has been very passive with this. In fact, they have been approving most of these buyouts and mergers, which is one of the reasons why this topic is so important.
Acquiring listed companies
In most cases, mergers happen between two large corporations that create these ultra-large companies that tend to dominate local markets. Although it may sound good on the surface, this is actually one of the biggest problems a community may face.
Imagine a small town in Florida, where most of the shops, restaurants and various other venues belong to local families. A town of small businesses that pretty much survive off of each other. Now bring in a large corporation that can easily compete with these small businesses in terms of price and volume.
What usually happens is that these large corporations step into a community, bankrupt small, local businesses and then jack the prices up. In some of the worst cases, these large corporations will just wipe out the competition in a city or a country—and then just leave. This leaves locals without direct access to a specific service that was hijacked by these corporations, thus making life much harder.
Not every acquisition is bad though, as some come with perks such as lower prices and improved service.
Monopolizing the entertainment industry
Let’s be a bit more specific now. Florida’s entertainment industry is one of its biggest revenue streams. It also allows residents of smaller towns to have easy but well-paying jobs in large cities like Miami, Orlando and Tampa.
This is done through a balanced share of the local entertainment market. There are dozens of companies that can be found in Florida’s industry, but talking about it generally is not going to help. Let’s narrow it down even further and focus on Florida’s gambling industry, one of the most profitable.
Recently, there have been talks that some of the largest casinos want to merge with each other and combine their services. This is a bad idea for one very simple reason. There will be no diversity. People would have to go to the same company’s venues all the time, thus making innovation and customer satisfaction less important.
This is especially problematic for relatively smaller gambling venues that are designed for communities as a fun way to spend a weekend or a Friday night. Unfortunately, as mentioned before, casino companies that will not have access to a specific community can still manage to drive local companies out of business through digital services.
The truth is that the gambling industry is more interconnected than ever before. This explains why it is so sensitive to change. Unsuspecting regulatory approval in Norway might affect the way the casinos down the road put up their prices. This is exactly what is happening right now.
The Norwegian operator, Betsson, has recently bought up a huge portfolio of BC2 operations, which includes some fan-favorites like Guts, Kaboo, Rizk and Thrills. As U.S. officials are slowly warming up to the gambling industry, the top-rated Norwegian bookmakers are already seeing the positive outcomes of the decision.
It is only a matter of time before providers around the globe adjust to change. And that change may destroy what people love and use on a daily basis.
The food industry
The food, drink and hospitality industry is characterized by cutthroat competition. This is the best example of an “adapt or die” attitude anywhere on the market. It is sad to see the 47 South Florida Dunkin Doughnut stores go to new owners, in a move instigated by the franchise group. Customers are openly asking whether their intention is to scale down the competition by buying out or closing the existing outlets.
The food industry in South Florida is starting to resemble a monopoly. On the operations side, we see that the industry is dominated by the same four to five corporations. Almost half of the dining places are run under the same management. Smaller or independent operators are under increasing pressure of being bought out. There is no way of stopping these kinds of acquisitions.
This could have terrible consequences for the rest of the South, considering how popular it is to have family-run restaurants down here. Imagine your favorite BBQ restaurant gets bought out by a large corporation making their BBQ ribs and briskets in factories. A place where they use artificial smoke to add flavor rather than having the meat actually smoke for 24 hours as the South’s best barbecue chefs know it should.
There will always be the danger of being bought out by a large corporation and small businesses ruined because of cutting corners. Regulators need to be more vigilant in stopping these acquisitions when they can.