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Companies evolve and grow all of the time – and sometimes that means merging with or acquiring another business. You may be looking to expand your business reach and take over more of the market, or hoping to branch out from your current specialism.
No matter which option you choose, it’s important to understand the mergers and acquisitions law and processes to follow. Keep reading our guide to learn how to begin.
You might hear the terms business merger and business acquisition thrown around in the same sentence – but the two are very different things. If you’re thinking about the future of your company, choosing to merge with or acquire another business will depend on your business goals.
While both terms refer to the joining of two separate companies, there are some key differences.
A business merger is when two different companies join together to create a new organisation, merging resources and staff. Mergers are less common than acquisitions as there’s usually a very specific business reason for it happening.
Business mergers often happen between two companies of a similar size or scale, who are making a strategic decision to grow their businesses together as one.
Mergers don’t just come in one form. Depending on your business goals, your merger could be considered:
A business acquisition is when one company is taken over, or acquired, by another. This doesn’t create a new company, as the acquired business is absorbed into the purchasing business. This often happens when a larger, more established business acquires a smaller business.
The main difference between mergers and acquisitions is that mergers are generally voluntary moves, whereas acquisitions may not be. This could be due to financial reasons or a change in senior management and often leads to the liquidation of the acquired company.
There are many different advantages to merging with or acquiring another company and each will be specific to your business. When deciding if a merger or acquisition is right for your business, some outcomes to consider are:
Now that you know the difference between a business merger and an acquisition, you might be ready to take the next steps in merging with or acquiring another business. Whether you’re buying a business or selling one, it’s necessary to fully understand the process.
Every business is different, so it’s important to consult with a business or legal professional who knows the exact circumstances surrounding your company. But below we’ve laid out rough guidelines of the steps you may take during a merger or acquisition.
Of course, sometimes even after all that planning, things don’t work out. Business mergers and acquisitions can be risky – you could end up in a bidding war during a merger or experience tough negotiations during an acquisition.
You could lose key members of staff, fail to meet projected targets, or find your workplace cultures just aren’t compatible. This is why it’s important to do your research and due diligence checks before any contracts are signed.
Once you’ve successfully merged with or acquired another company, you’ll have access to a whole range of new markets and opportunities. Internally, you need to make sure any business changes or strategies have been clearly communicated to staff – particularly after a merger, where the staff of two businesses now work together.
Depending on how public you’ve made your merger or acquisition, there’s different opportunities for your next steps. You can use this as an opportunity to refresh your brand identity or how you market your business. A merger or acquisition can also be a great PR opportunity, furthering your market reach possibilities.
Have you ever thought about merging your business with another? How did it go? Let us know how it went in the comments below.
Rosanna Parrish is a Copywriter at Simply Business, specialising in legal and HR content. Trained at London College of Communication, she has been creating content professionally for eight years at publications across the UK and Spain. Starting her career in health insurance, she also worked in education marketing before returning to the insurance world. Rosanna also writes about wellbeing in the workplace. She lives by the sea and does her best writing in coffee shops.
We create this content for general information purposes and it should not be taken as advice. Always take professional advice. Read our full disclaimer
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