Dale M. Maas, Attorney at Law
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The basics of a merger

For any business owner considering a merger, there is a lot they should know. A merger is a big step for any business which is why it is essential for business owners to understand how the merger process works. Mergers can have an impact on not only the business but shareholders, stakeholders, directors, managers, employees and customers as well so they should not be approached or considered lightly.

The way that a merger works is that the two companies merging combines both their assets and liabilities. The shares of one company are converted to the shares of the other company and, in essence, one company survives the merger process. Because of the high stakes associated with a merger, both companies involved should perform their due diligence and ensure they understand the legal standing and finances of the other.

There are a variety of factors and considerations to take into account to determine if a merger is the right step for the business. Factors that should be considered include if the merger is a good strategic fit and if the values of the merging companies can be protected in the merger. Business owners considering a merger will should be familiar with the valuation process, warranties, completing an asset sale and other aspects of the process as well.

It is important to take all major business transactions seriously and a merger is no different. A merger can be an excellent opportunity for a business as long as it is the right step and conducted properly which familiarity with the process can help ensure. In addition, because of the complexities involved the merger process, trained guidance can be helpful.

Source: Smallbusiness.findlaw.com, "Mergers & Strategic Transactions: Forms and Contracts," Accessed May 10, 2018

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