5 Things to Think About Before a Small Business Merger

Originally posted 2018-11-19 11:20:25

By Diana Chan | amdlawgroup.com

ID-100249468Companies often merge together to improve overall performance of the companies. While merging a small business with another may seem like a good strategy to expand the consumer base and generate profits, you should be wary of some issues.

  1. Know who you’re merging with. While first impressions are important, you should have a good idea of who you are going to be working with. Establish what exactly the business relationship is, who has what responsibilities and what happens if the business relationship doesn’t work out.
  2. Do the two companies’ cultures align? If they do, it’s a good sign that the businesses will integrate well with each other when it comes to employees and management. If not, there will likely be persistent conflicts with how business projects are run.
  3. Mergers usually involve give-and-take. While you will want to run things in your company’s best interest, the owner of the business you want to merge with will want what’s best for his or her company. Know what your business’s vital assets are and what you’re willing to sacrifice.
  4. Take the time to carefully plan. While the thought of expanding a business is exciting, carefully think about if a merger is really in the best interest of your small business. Poor planning could end up hurting the business later down the road—leading to a mess you may not be able to get out of.
  5. Don’t sign anything without getting legal advice. Once you bind yourself to an agreement, it is often difficult to get out of any obligations and could be detrimental to your business.

A merger can have a positive effect on two businesses by increasing access to customers and acquiring skillsets. With these issues in mind, your small business will be better able to protect itself.

Resources: http://www.businessweek.com/articles/2013-07-10/how-to-keep-your-small-business-merger-from-crashing

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