Being Proactive In Assessing Business Merger Options
On behalf of The Law Office of Lynnette Ariathurai, A Professional Corporation posted in Mergers & Acquisitions on Friday, April 17, 2015.
Many California business owners recognize the benefits of merging with other entities. Doing so can result in improved market dominance, an expanded financial reach, and the acquisition of a new pool of talented workers. However, many business merger attempts ultimately fail, and they do so at a significant loss to those involved in the process. In order to ensure that a merger is viable, it is essential to be proactive in assessing all aspects of the union from the outset.
The old adage concerning the 20/20 nature of hindsight is largely true. Many failed mergers are later attributed to reasons that were present and obvious from the outset. However, it is not uncommon for merger talks to continue for months or even years after these roadblocks are uncovered. The best way for companies to move a proposed merger forward is to address these issues as early in the process as possible.
One of the most common issues that can impede a merger is a lack of alignment when it comes to future strategies. This can include different views of future expansion of the business, or differences of opinion on how to secure financing for future growth efforts. It may also include strife related to how to best expand within the digital realm, including online marketing and promotion.
Other issues that often lead to the death of merger talks include a lack of agreement on how partnerships will be structured, as well as the role of management in directing the course of business growth and expansion. Sometimes, contention centers on matters of compensation, for both employees and owners. Regardless of the subject matter, a great deal of these sources of conflict can and should be revealed in the early stages of business merger discussions.
When California owners are able to identify and address these and other potential roadblocks, mergers are often able to move forward smoothly. Encountering difficulties in the later stages of a business merger can breed contempt and resentment, which are counterproductive for all involved. Even when a merger is simply not the best course of action, realizing this truth in the early stages will save a great deal of time, effort and money for all parties.
Source: bna.com, "Considering Merger? Spend Your Time Wisely", Kristin Stark, April 10, 2015