How to Merge Two Small Businesses

Merging two small businesses offers incredible growth opportunities, but it can also be fraught with challenges and complexity. Taking the time to do your due diligence and ensure that everything is in order prior to the merger will help you make a smooth business transition towards a new corporate entity.

As you consider merging your Florida small business, contact our attorneys at Silverberg|Brito, PLLC for guidance and follow these important merger guidelines:

Evaluate the fit of the merging corporate structures – Compare and analyze the two business entities and evaluate how the new entity may come together. Will they consolidate and merge, or is an acquisitions a better structure? Tax considerations may also play a role in determining how the new deal is structured as will stakeholder interests and expectations.

Understand leadership and culture challenges – Determining who will lead the new company may be among the biggest challenges of the merger. Subsequently, a new leadership structure and organizational chart will also need to be developed, which can sometimes contrast rather starkly with one or both of the pre-existing organizations.

In terms of culture, the dynamics of the company may not mesh and finding a path forward for how the business and its employees will engage with each other is important to consider. Culture impacts employee engagement and morale, and without engaged and productive employees, the business can significantly suffer.

Plan for future branding – A new corporate structure, new leadership, and new culture means there is a need for new branding. Even if the business chooses to retain one of the merged company’s branding elements, a new marketing plan will need to be ready to address the business’s place in the market.

Consult the balance sheet – Understanding the financial positions of both companies is imperative prior to a merger. A tax accountant can offer insightful analysis that could make or break the deal. Analyzing operating costs from the past several years is also a strong indicator of the health of a business.

Conduct a business valuation – Knowing the value of each company prior to the merger ensures fair and proportional allocation of shares in the new company.

Successful mergers and acquisitions can be months and sometimes years in the making. By working closing with an experienced business attorney and being as transparent as you can during the process will help make the process go smoothly for everyone. At Silverberg|Brito, PLLC, we are more than just lawyers – we are problem solvers and will work closely with you as you expand your business.

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