To Merge or Not to Merge: Is It Right for Your Small Business?

Merging two businesses is a strategic decision and one that should be made with care and counsel. Not only does a merger or acquisition impact the financial future of your business, it will also impact your employees, the business culture, and future corporate structure of your entity.

What to Consider When Merging Two Businesses

Business mergers, just like human relationships, require a level of compatibility in order to be successful. Many mergers will go on to do great things, but many will also fail.

To assess if a merger is right for your business, it helps to evaluate your goals and priorities – and to do so in consultation with a Florida business attorney.

If you’re considering a merger, you may be doing so for the growth opportunities it presents, to increase your share in the market, or to consolidate your business and resources with another company.

These are all valid reasons, but in conjunction with these goals, it’s important to assess other factors, such as:

  • Culture fit – Are you setting two businesses up for a potential culture clash? It can be easy to underestimate the power and influence of culture on a workforce, and incompatibility between two merging businesses could lead to disengaged employees and a suffering bottom line.
  • Business valuation and performance – What is each business worth today and what are realistic projections for future profitability? Mergers can fail when too much emphasis is placed on current products or systems that later fail to perform at expected levels.
  • Cost savings – Do the savings outweigh the costs? If consolidation does not go as smoothly as planned, more money may end up going into the merger than is ultimately worth it from a financial perspective. Consult past balance sheets to fully understand the financial positions of both companies and consult a tax accountant for their insight and analysis.

In addition to bigger-picture merger considerations are also questions about leadership structure, ownership equity, and other contractual obligations. If you’re considering a merger for your business, contact our Florida commercial law team at Silverberg|Brito, PLLC. We will work side-by-side with you to tackle your business challenges and opportunities.

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