Business mergers and acquisitions are similar in that they involve two businesses coming together, either for their mutual benefit, or for the purpose of making one of the two companies much larger. In the case of the acquisition, one company generally absorbs the other, thereby becoming a bigger business entity. A true merger involves two companies of relatively equal size, joining forces for their mutual benefit. If you are thinking about a business merger, here are some things to keep in mind.
Conduct a business valuation
In business mergers, t’s important that you find out what the other business is worth, so you can tell how advantageous it would be to join forces with that company. More than likely, you will want to hire a professional business appraiser to make sure that the job is done correctly, and that you have an accurate assessment of your potential merger partner.
Prepare a sales agreement
In order to move forward with your business merger, you will have to prefer prepare a merger agreement which identifies the names of the two businesses, as well as the owners. Background details will have to be filled in, and all inventory and assets for each company will need to be identified. The document will also have to specify that assets or stock of either or both companies can be purchased, and all liabilities of both companies must also be specified.
The business merger agreement referenced above will specify exactly how ownership is to be transferred, and what the new ownership arrangement will look like. It’s highly advisable to have an attorney on hand to review the merger agreement, and point out any legal considerations which may not have been accounted for. Once this has all been decided, you’ll have to register the merger results with the state where the transaction has occurred, according to the governing regulations.
Need funding for a merger?
If your small business lacks the funding for a business merger, you should contact us at Business Capital Providers. Our financial experts may be able to work with you, to supply the needed capital to help make your planned merger a reality. Contact us at your convenience, so we can explore some options that may be financially helpful for your business.