Business Merger: 3 Things to Consider


If you are looking to expand your business empire, you may be considering buying a smaller business. However, while business mergers can be a great move, they can also be incredibly complex. A merger will often involve prolonged negotiations between the different parties before they agree on the value of the company, which is for sale and the terms and conditions of the merger. If the law is not properly followed during a merger, it could cause the deal to break down. Below is a guide to 3 things you should consider when considering a business merger.

The End Goal

When planning your business merger, you should first carefully consider the purpose of the merger. There are many reasons a company may wish to merge with another. These include:

  • Increased Knowledge: If the other company has carried out research and development on a product or service, your business can acquire this knowledge via a merger.
  • Increased Market Share: By eliminated smaller companies, you can increase your business's market share.
  • Reduced Cost: Merging with another company can reduce production cost, as the economies of scale will make it cheaper to produce products.

During the merger process, it is easy to lose sight of your end goal. By keeping your end goal in sight, you can ensure that you get the best out of any negotiations.

The Employees You Wish to Keep Onboard

A merger will usually result in some job losses at the company which is being bought out. While negotiating the merger agreement, you should consider which employees from the other company you wish to keep onboard. If there are employees who have a particular skill set or who have built strong relationships with clients, you should ensure that they are transitioned over to new roles within your company.

Potential Challenges

You should also be aware of and prepare for possible problems your company may face during the merger negotiations. These challenges include:

  • A Conflict of Interest: A conflict of interest arises when it is discovered that one party has an interest in a third party which is connected to the negotiation. You should conduct a review to detect any potential conflict of interest before negotiations begin.
  • Price Disagreements: Before you enter into negotiations, you should have the company you wish to purchase valued by a professional. Doing so will allow you to more easily deal with any disputes about the price you are being asked to pay.

If you are considering carrying out a merger, contact a commercial lawyer today.


3 February 2017

Managing copyright issues

My brother wrote a really awesome app last year, and he got a whole lot of downloads straight away. It's been pretty awesome for him to see so many people enjoying his work. I have been helping to get him some advice on how to manage his copyright issues so that he can make the most of all of the characters and ideas that he has put so much work into. It's been really interesting seeing how much work there is behind the scenes in protecting copyright. I hope you find it useful in thinking about how to structure your own business and get relevant legal advice.