Corporate mergers can be daunting for everyone involved. There is much to process, and state and local laws must be observed during the process. Mergers are usually beneficial for both company owners, and if you are currently considering a merger, there are a few important facts you may want to be aware of before you move forward.
- Mergers and Acquisitions Are Not Equal
While you might believe a merger and acquisition are the same actions, there are a few differences. The most important is how management at the company is handled at a merger once the process is complete. There is likely to be a great deal of infrastructure change and employees may see many rules and regulations change as both companies merge their cultures. Acquisitions are not as likely to cause such a shakeup, and most operations will likely continue as usual.
- People Drive Mergers
You might think of mergers as the result of two large companies coming together to create a larger or more profitable enterprise, it is typically individual chairmen or executives that make the decision whether to do so. They may be tracking the market to gauge the best time to make the right move or perceive gaps that could be effectively filled by a merger. This makes offers dependent upon which company heads are ready and willing to create such deals, and when.
- Mergers May Include Risk
Forming a corporate merger may be as risky as investing in stocks or a new business. Not all mergers are successful and some fail due to shifts in the market, poor timing, or a misjudgment of consumer need. Others fail in the year following the merger because branding changed and consumers lost trust. Before you involve your company in a merger, it is wise to consult a business attorney to discuss the risks and how to avoid losing all your assets if the plan should fail. This can be especially important if you have never been involved in a merger previously.
- Employee Retention Numbers May Shift
Mergers do not agree with everyone, and you might see a shift in employee turnover once the merger is complete. Consider discussing the merger with your key employees as the process begins and let them know what changes lie ahead. While not all of your workers may fit the new culture once the merger is complete, keeping managers and other key people informed may result in a smoother transition.
Corporate mergers can be a challenge for any business owner. For more information about how this process might affect your company, contact a corporate lawyer today.