3 Ways to Ensure a Successful Small-business Merger

It’s not uncommon for small businesses to plateau or become stagnant, especially if they have cornered their local market. Once you’ve become the top dog in your area, there’s nowhere to go but down. Of course, you want your business to keep growing, so you set your sights on expanding to new areas. But you have to deal with new competitors and a foreign market, which is why many entrepreneurs turn to mergers and acquisitions to fuel growth.

Mergers and acquisitions, also known as M&A, are often associated with billion-dollar corporations. But entrepreneurs merge and acquire small businesses all the time. Maybe they want to enter a new market, so they acquire an established firm in the area. Or they want to buy a rival company to remove the competition. Regardless of their reasons, all they need is a competent business attorney to iron out the details and handle the paperwork.

But an M&A is not to be taken lightly. A botched attempt could lead to legal challenges and even ruin both companies. Here are a few things you might want to think about as you consider an M&A.

  1. Create a strategic plan

Any successful merger starts with a plan that outlines the vision and goals of the process. You should know where your business stands right now (e.g., value, market share, location), what you want to achieve (e.g., new product lines, increase market presence), and what your values are. Think of it this way: an M&A will help you take your business from point A to point B. Meanwhile, your values can influence the way the process is carried out.

What are your reasons for merging with or acquiring another company? Do you want to enter new markets? Eliminate the competition? Expand your product lines? Whatever your answer, it should help you formulate a strategic plan for the process.

  1. Assemble a transition team

employees in the office

The success or failure of a merger hinges on the quality of the transition team. They are responsible for trimming the fat and ensuring that the best qualities of both companies are retained in the new consolidated one.

If you’re acquiring a smaller business, it makes sense for you to retain leadership. But you’ll also need a team consisting of the best people from both companies. That way, they can formulate a strategy that will help ensure that your strategic goals are met. Merging two office cultures can be difficult, so they’ll also need good communication skills and lots of patience.

  1. Perform due diligence

One of the most critical parts of an M&A is due diligence. Before you merge with or acquire another business, you’ll need to check their financial statements, business operations and processes, intellectual property, among others. You don’t want any surprises, since you’ll take on their liabilities as soon as the merger is complete.

Mergers and acquisitions are a popular mechanism for businesses of all sizes to ensure continued growth. These things will help you navigate the tricky world of M&A and ensure that your business wins out in the end.

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