5 Things You Need to Know Before Merging Your Business

Merging Your Business

~by Lizzie Weakley~

Mergers and acquisitions can give companies a fast way to expand product lines and enter new markets. Still, merging with another company introduces many variables, some of them unknown, into your business model. A well-planned merger has no guarantee for success, and a hasty merger can easily ruin your business and credibility. Spend some time learning about the following five things before merging your company with another.

1. Make a good case

Even if you don’t answer to anyone, you owe yourself a thorough review of any merger proposal. Begin by examining your motivation for merging with another company. Also, conduct a thorough accounting review of both companies to ensure that you have accurate numbers to work with. Even if you have only a limited time to complete a merger, expend the necessary time and effort to make sure that you base your decision on accurate information.

2. Get legal advice

You already know the complex laws and regulations that apply to your business. Additional rules might apply to you when you merge with another company. Before you put your company at risk, get legal advice. Firms such as Carter West know how to organize and manage the legal transactions, including mergers. With the right advice, you’ll know exactly what you need to do to negotiate and structure a merger.

3. The worst might happen

Consider your risks if your proposed merger fails. If you’re betting on a merger to save your company, you could lose it if another firm withdraws from the deal. As you meet with your legal counsel, insist on creating an exit plan that will help you stay viable as the deal unwinds.

4. Inform your employees

You might fear an employee exodus if you tell your employees about your merger proposal. If you don’t stay transparent, however, you risk an employee backlash as your fearful team members feel betrayed. You’ll have a much better experience if you keep your staff informed about every merger detail, even if it means telling them that some employees will not be needed for the new company.

5. Question everything

You need to have complete and accurate information about the business with which you propose to merge. Question all the numbers the other company provides you and don’t be afraid to question any apparent inconsistencies. Similarly, make sure all the information you provide another firm is complete and accurate.

Learn the above five things business owners should know before merging with another company to improve your chance of success and minimize your risk in case something goes wrong. Proceed with knowledge and caution and your merger could be the beginning of a fantastic new chapter in your business career.


Meet the Author: Lizzie Weakley

Lizzie is a freelance writer from Columbus, Ohio. She went to college at The Ohio State University where she studied communications. In her free time, she enjoys the outdoors and long walks in the park with her 3-year-old husky, Snowball.

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