Aetna 2014 Annual Report Download - page 76

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Annual Report- Page 70
Risks Related to Our Acquisitions and International Operations
We expect to continue to pursue acquisitions and other inorganic growth opportunities, which may be
unsuccessful, cause us to assume unanticipated liabilities, disrupt our existing business, be dilutive or lead us to
assume significant debt, among other things.
We completed the bSwift and Interglobal group acquisitions in 2014 and the Coventry acquisition in 2013 and
expect to continue to pursue acquisitions, joint ventures, strategic alliances and other inorganic growth opportunities
as part of our growth strategy. In addition to integration risks, some other risks we face with respect to acquisitions
and other inorganic growth strategies include:
• We frequently compete with other firms, some of which may have greater financial and other resources and
a greater tolerance for risk, to acquire attractive companies;
• The acquired businesses may not perform as projected;
• The goodwill or other intangible assets established as a result of our acquisitions may be incorrectly valued
or may become non-recoverable;
• We may not obtain the projected synergies as we integrate the acquired businesses (including Coventry);
• We may assume unanticipated liabilities, including those that were not disclosed to us or which we
underestimated;
• We may experience difficulties in integrating acquired businesses into our existing operations (including
our internal control environment), be unable to integrate acquired businesses successfully or as quickly as
expected, and be unable to realize anticipated economic, operational and/or other benefits in a timely
manner or at all, which could result in substantial costs and delays or other operational, technical or
financial problems;
• The acquired businesses, or the pursuit of other inorganic growth strategies, could disrupt or compete with
our existing businesses, distract management, result in the loss of key employees, divert resources, result in
tax costs or inefficiencies and make it difficult to maintain our current business standards, controls,
information technology systems, policies, procedures and performance;
• We may finance future acquisitions and other inorganic growth strategies by issuing common stock for
some or all of the purchase price, which would dilute the ownership interests of our shareholders;
• We may incur significant debt (whether to finance acquisitions or by assuming debt from the businesses we
acquire);
• We may not have the expertise to manage and profitably grow the businesses we acquire, and we may need
to rely on the retention of key personnel and other suppliers of companies we acquire, which may be
difficult to accomplish;
• We may enter into merger or purchase agreements but, due to reasons within or outside our control, fail to
complete the related transactions, which could result in termination fees or other penalties that could be
material, material disruptions to our business and operations and negatively affect our reputation;
• In order to complete a proposed acquisition, we may be required to divest certain portions of our business;
and
• We may be involved in litigation related to mergers or acquisitions, which may be costly to defend and may
result in adverse rulings against us that could be material.
As we expand our international operations, we will increasingly face political, legal and compliance,
operational, regulatory, economic and other risks that we do not face or are more significant than in our
domestic operations. Our exposure to these risks is expected to increase.
As we expand our international operations, including through our 2014 acquisition of the InterGlobal group, we will
increasingly face political, legal and compliance, operational, regulatory, economic and other risks that we do not
face or that are more significant than in our domestic operations. These risks vary widely by country and include
varying regional and geopolitical business conditions and demands, government intervention and censorship,
discriminatory regulation, nationalization or expropriation of assets and pricing constraints. Our international
products need to meet country-specific customer and member preferences as well as country-specific legal
requirements, including those related to privacy, data storage, location, protection and security.