Establishing your own small business is a huge leap in your career. It entails several considerations, both in your personal and professional lives. However, a business could sometimes go astray, leading you to consider selling or restructuring it.
One feasible way of keeping your business is through a merger. You could partner with another business owner to help restructure your business. However, this involves a complicated process that could affect both companies. Here are three key factors that could help you navigate through your business merger.
Is it a merger or acquisition?
When businesses come together, one of the crucial discussions is often about the business setup and hierarchy. Deciding whether they want a merger or acquisition could have a major bearing on both businesses. In a merger, the two business entities join hands to establish a new company. Meanwhile, one business takes over the other in an acquisition. This decision offers opportunities and risks, affecting the overall structure and operation of both businesses.
How will it affect your business?
Any change could have a significant impact on your business, both internal and external. Your merger would affect your overall operations, including culture and costs. When there is a misalignment in values and management styles, the company might compromise the efficiency of its human capital.
Moreover, a merger could affect how your existing customers perceive your business. Aligning your business branding, advocacies and customer engagement could affect your business’s market value. A merger allows you to leverage your partner’s market, but it could also pose challenges to maintaining customer loyalty.
What are its legal implications?
You must carefully discuss every potential financial and legal risk associated with your business relationship. Aside from business administration, you must also navigate through legal aspects such as transferring liability, updating representations and registering the business.
Understanding how to prepare for and go through a merger could lead to a successful business restructuring. Nonetheless, as every case is different, it is valuable to seek the guidance of a legal professional experienced in business law. Their practical knowledge could provide you with effective strategies and help prevent potential legal complications.