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April 18, 2017

Completing a Business Merger – The Steps to Success

A successful corporate merger can bring vast benefits and in doing so can strengthen two or more businesses, creating a superior offering for the client.

However, if handled improperly, the merging of businesses could take the form of a logistical disaster, resulting in damage to all parties involved. 

Avoiding this merger-style meltdown can be simple when certain steps are implemented at the beginning of the process.

An obvious start would be speaking with business advisory experts which should be the priority early on,  to ensure the smooth integration, and to identify any potential issues before they are exacerbated.

It's important to ascertain if both companies have shared business goals and objectives. Are there any views or opinions that clash? Are different practices in relation to similar areas that could cause friction? These are questions that directors should ask from the early discussions to identify if the partnership is in the best interests of both companies.

As a professional business, due diligence is essential to ensuring a company’s continued success after the acquisition. Undertaking this audit-style investigation of the other company’s finances, legal issues, clients, and strategies, will allow better preparation and eventually will help to inform decision making going forward.

A companies ethos and culture is also an essential factor to consider when planning to bring together two teams. Employees may have worked at an organisation for a significant period of time, and have established particular ways of working. As such, both teams should have open lines of communicating from the start to encourage an integrated and successful working relationship.

Understanding a company’s future goals and aspirations is recommended. What do you hope to achieve together after the merger or acquisition is completed? Are you looking to attract a new client base? Expand into new territories? All of this should be shared between the companies proposing to merge to ensure a joint vision is shared.

Finally, a legally binding non-compete agreement should be discussed to safeguard the future success and growth of both parties. This will ensure neither can compete for the same business and inadvertently lead to competition or tension among the merged teams.

If you are looking to expand your business through acquisition or if you're planning to merge with another company get in touch with our highly experienced Corporate Finance and Mergers and Acquisitions Team on corporate@greenawayscott.com. 

This article was first published on the 18th April 2017 on Business Wales, read the article here.

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