Updated: June 30, 2021
In Part 1, we gave you an inside look into the beginning phases of a merger and what you need to know to hit the ground running. In this Part 2, we’re wrapping things up with details to keep in mind for the final stages.
Know What You’re Getting Into
- Be in it for the long haul. Many mergers can take a long time to develop. Even if you don’t specify how long the merger will last, be prepared for a commitment that will continue for at least 2-3 years.
- Prepare your employees. A merger comes with a lot of internal company changes, which may include new staff and people moving to different offices. As a business owner, it’s important to include your team in this process and provide support to those who are adjusting to the new structure.
- Prepare for backlash. While business owners may see the benefits to a merger from the very beginning, members of the public may not always agree. When Comcast announced it would be purchasing Time Warner a few years ago, many users were against the merger, arguing that Comcast would be able to unfairly dictate content. As a business owner, it’s important to listen to these concerns and be prepared to explain the upside to merging the businesses.
When you’re ready to move forward, just take it one step at time.
Step by Step
Step 1: Perfect Fit
- Make sure your corporate cultures and beliefs match.
- Each company is different and may have different game plans or end goals. For a smooth transition, do the research beforehand to make sure your interests will align.
Step 2: Ask and You Shall Receive
- Seek legal and financial guidance.
- Consider getting proper advice before signing any agreement.
- Letters of intentcan go a long way to show what each company is trying to accomplish through the merger.
Step 3: Plan & Execute
- Come up with a strategy.
- Set up a comprehensive and detailed business plan, discuss your goals with the members of the other companies and get an idea of what they hope to achieve.
Step 4: Negotiate
- Shoot for a better deal.
- Keep your goals in mind and don’t be afraid to ask for more favorable terms.
- Know what you can give up, but realize when to stand firm.
- Read through your company documents carefully and familiarize yourself with theirs before beginning negotiations.
Step 5: Hit the Road
- Have an exit strategy.
- Everyone enters a business deal hoping for a smooth transaction, but unfortunately, things don’t always work out. It’s critical to have an action plan in case things go south.
- In Investors and lenders want to know their resources are protected, so having an exit strategy will help add more security.
Keeping these tips in mind during your business merger will help ensure the process goes smoothly. It’s a big endeavor and it can involve a lot of details, but taking the time to make sure you go through the right steps will help you greatly in the end.
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