Dale M. Maas, Attorney at Law
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Understanding the ins and outs of a business merger

The goal of business mergers for both buyers and sellers is to create a company that brings the value of both businesses together. When a merger is well-executed, it can be positive for both of the companies that are part of the merger. A well-executed merger in Louisiana can enhance the capabilities of the resulting company, increase its shareholder value, reduce costs and create better operational efficiency.

Business mergers typically include a target company and an acquiring company. It is important to keep in mind that mergers involve a number of working parts and more than half of all mergers fail, so it is helpful to know as much as possible about the process to help facilitate success. Merger and acquisition activity can take place in the middle market and involve small companies, as well as large companies. For the intended benefits of a merger to be realized, there are some important considerations to keep in mind.

It is important to have a strategic plan for the merger and to ensure the move is aligned to fulfill that strategic plan. Acquiring companies should always be prepared to perform careful due diligence concerning the company being purchased. In addition, important considerations can arise related to work force talent, integration of IT systems and preserving company culture. Projects that have been lined up may also need to be re-evaluated and every effort should be made to keep communication lines open. Identifying value and potential problems early on is helpful during the merger process.

A failure to take into account some of the potentially significant concerns associated with mergers and acquisitions can have a negative impact on the merger's potential success. Mergers can be complex to navigate, and challenges can arise, but having the proper knowledge, guidance and understanding can help facilitate a smoother transition during the merger process.

Source: National Center for the Middle Market, "Ensuring a Successful Business Merger," Chuck Leddy, June 18, 2014

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