Merging businesses can be a daunting task. There are many assets at stake, lots of parties involved and numerous steps to consider. But, mergers can give companies the chance to grow their business, eliminate competition, and diversify their overall goals.
It may be a lot, but taking these extra steps and understanding the value of a merger can help you take your company to the next level. Keep these tips in mind whenever you find yourself starting the merger process.
What’s a Merger & Why Does It Happen
A merger is the combination of one or more businesses. There are many reasons why companies decide to merge. Some owners lean towards a merger because it would benefit both companies financially. Others may want to combine forces to get ahead of competing businesses in their industry. Companies may also decide to merge in order to expand into wider networks or to cut costs by combining locations and reducing operating costs.
Beginning Phases: What to Know
Companies run their operations very differently from one another, so it’s important to prepare. Before starting the merger process, business owners should consider:
- Come up with a strong business plan: Make sure that your interests and reasons for a merger align with your business partner. That way, when the companies merge successfully, you won’t have competing business interests that will threaten to undo all of that good work!
- Analyze this, analyze that: Conduct a stakeholder analysis in order to get a sense of what challenges you may face in the beginning stages of the merger and the impact it may have on potential clients, colleagues and consumers.
- Consult with your shareholders: Planned mergers usually require the consent and support of the majority of the shareholders. Some shareholders’ involvement in companies may vary, so no matter how involved these shareholders are in the day-to-day operations of the business, it’s important to keep them updated and involved in the merger process.
Getting familiar with these first few steps in the merger process will give you a good idea of what you’re getting involved in. Be sure to check out our Part 2 of this guide in a couple of weeks for advice on the final stages of a merger!