There are many reasons why companies would decide to merge. When done correctly, profits can be increased, competition reduced and money can be saved. However, going through the process of a merger is serious, and should not be undertaken unless all parties clearly understand and approve of the process.
1. Evaluate the Pros and Cons
A merger can broaden a company’s customer base and result in increased sales. If the two businesses were competitors, then the reduced competition can also result in extra profits. However, when two or more companies announce their intent to merge, it can create a lot of confusion among their employees. Workers may fear layoffs and large changes to their daily routines. To reduce fear and uncertainty, communicating with workers should be a priority.
2. Determine the Type of Merger
Depending on the businesses involved, there are different options available. An experienced business law attorney Long Island NY can help determine which choice is best for all parties involved. If the companies are competitors, then it is likely they will join in a horizontal merger, while a conglomerate merger is used for businesses that have nothing in common. Researching the different kinds is a good way to make an informed decision.
3. Negotiate the Terms
An attorney should assist in not only recommending the type of merger but also in negotiating the terms. It is important that these negotiations not be rushed, as ideally, the merger will be beneficial to all companies involved. All assets and liabilities should be clearly outlined, and any redundant staff members should be evaluated, with the strongest workers selected to stay in their roles.
While going through the process of merging multiple businesses can be difficult at times, if the end result is a new company that is stronger, more profitable and ready to increase its foothold in new niches, it will be worth it.