Things To Consider Before Beginning A Business Merger

If you've been thinking about expanding your business by buying out a smaller company, there are several things that you need to know about business mergers before you start the process. It isn't easy to combine two companies. There is a lot of leg work that needs to be completed before the deal is finalized, and there are things that need to be done after you seal the deal in order to maintain company morale. So, consider these things before you start your business merger.

Know Your End Goal

Business mergers can be time consuming, expensive, and problematic if they aren't handled correctly. So, before you even start the merger process, you need to make sure you know exactly what it is you hope the merger will achieve. Many companies merge in order to increase their customer base, enter a new target market, freeze out a competitor, or close a gap in a company's abilities. There are so many things that a business merger can accomplish if you have a clear, focused path. Before your business lawyer begins that merger process, he or she needs to know your ultimate goal. This way your lawyer can negotiate a deal that benefits you.

Retain Key Employees

Before your company merges with another company, it's important that you understand how the business operates on a day-to-day basis. You also need to know who the company's key employees are and what they bring to the table. By retaining the company's most valuable employees, it's easier to retain the company's current business relationships and contacts, because these are the people that already work in close contact with clients. If you don't retain these people after the merger, there's a chance that you won't retain the clients that they've built relationships with either.

Making Changes

If you want to retain employees after the merger is finalized, you need to make the transition as easy on them as possible. Business mergers can be scary for employees, so they need reassurance that things won't be changing a lot. To do this, you need to understand the culture of the company you're purchasing so that you can try your best to maintain it without making too many changes. You should take into consideration:

  • Computer systems that are used on a daily basis
  • Employee benefit packages
  • The current chain of command

Chances are, you're going to need to make some changes during the merger. However, by determining what needs to change — and what things can remain the same — you'll relieve some of the stress employees are feeling. Establish a give and take process from the beginning so that employees know exactly what to expect. For example, if you need to replace the computer system that employees are used to using on a daily basis, consider keeping their current benefits package in place to ease their minds a bit.

Business mergers require going over a vast amount of small details, sometimes multiple times. So, it's nearly impossible to complete a successful business merger on your own. To make sure everyone involved benefits from your upcoming business merger, talk to your business lawyer or Caldwell Kennedy & Porter before committing to anything.