A merger is a major event for any business but can also be a good and exciting opportunity for a business.
A merger can provide a growth opportunity but will likely have a significant impact on both businesses that are merging and stakeholders including shareholders, directors, managers, employees and customers.
When two companies merge together, they combine assets and liabilities. Essentially, one company survives the merger and the shares of the other company will converted into shares of the surviving company. There are a variety of considerations when determining if a merger is a good idea, including the financials of the proposed deal. It is also essential to look at the mergers strategic fit and if the core of the surviving business will continue intact. An ideal merger should be complimentary and not redundant.
Due diligence is required for a merger and it is important to carefully study and review the finances of each of the companies. In addition, there are many legal technicalities related to the conversion of shares and the combining of the two businesses so it is essential to draw up contracts and accompanying documents that protect the parties and their interests and also accurately reflect the agreement.
A merger can be a significant opportunity for a business that is looking to grow and expand its product line and services. As a result, the merger process is one that should be understood, well thought out, well negotiated and executed to help plan for its success. Due to the complexities associated with mergers, trained guidance can be helpful at every phase of the process.