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Home / Run and Grow / A Guide to Merging Companies Successfully
A Guide to Merging Companies Successfully

A Guide to Merging Companies Successfully

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Dec 20, 2021 By Luke Britton

Mergers and acquisitions are widespread for companies to grow, but not all mergers or acquisitions can succeed. When you combine two companies, many aspects need to be considered for the merger to be successful. To help business owners understand what is involved in a merger and how they can make it as successful as possible, we have created this guide on merging successfully in all aspects!

Photo by Matthias Zomer from Pexels

Financial Facets of Merging Companies Successfully

Mergers and acquisitions involve a lot of financial considerations, both in the short-term and long term. You need to consider how your company will afford the merger financially.

Many tax implications can come up when merging companies successfully; for example, there may be capital gains taxes or depreciation expenses involved with either party depending on what is considered part of each company’s assets/liabilities. A business owner must also decide if they want their new merged entity to have an interim period before consolidating everything into one accounting system, so they can track transactions more easily under only one set of books (this would mean having two groups initially.)

You should consult with your accountant and business advisor to ensure you understand and know how to deal with all aspects of the financial considerations involved in a merger.

Consider Employees and Customers

Merging companies successfully consider the employees and customers of both companies. You should have a clear picture in mind about what you want to achieve with your merger so that, if necessary, you can deal with any issues before they arise. For example, suppose one company is more significant than another but has less satisfied customers/employees while the other has better ratings on Glassdoor or Yelp. In that case, it may be more advantageous for business owners to keep the minor company name alive rather than killing off their good reputation by being acquired.

The same goes for employees; are there certain aspects of each job position that complement each other? Do some skills need to be transferred from person A to Company A to person B at Company B because specific knowledge will be required to make the merger successful?

Technology and Communication

To merge companies successfully, you need to plan how the two companies will communicate with each other. This includes everything from email systems and contact lists to file sharing protocols and even social media accounts.

You also need to consider what will happen to each company’s website; do you want them both to live under one URL, or should certain aspects of the website remain separate? What about customer service? Will people continue reaching out to support through the same channels they always have, or do you want/need to create new ones? One way to manage sensitive information during such a considerable transformation is to get a software escrow agreement to protect both companies until both settle in smoothly.

Legal and Regulatory Aspects

Merging companies successfully also consider the legal and regulatory aspects of the merger. This includes antitrust regulations, intellectual property considerations, and labor laws. You need to be aware of these before you even begin negotiations so that everyone is on the same page about what can and cannot happen during the merger. In addition, it is essential to understand how all these different pieces fit together; for example, if one company has more valuable trade secrets than another, you may want to consider having an agreement in place that allows those trade secrets to remain confidential post-merger.

The Bottom Line

Mergers and acquisitions are complicated processes, but they can be very beneficial for both companies involved when done correctly by taking the time to plan out all the details and ensuring that everyone is on board with what’s happening.

Filed Under: Run and Grow Tagged With: merger

Luke Britton

Luke Britton

Luke Britton writes frequently on business, economics, and marketing.

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