Merging a business with another is often a complex endeavor that requires the insight and guidance of an experienced business attorney. Read on for some basic information on how to conduct a successful business merger.

Understand the Structures of Each Business

How a business is structured is an important consideration when planning for a merger. Consultation with an experienced local business attorney is always the preferred course of action when determining how different business structures will impact a planned merger. For example, if a corporation is planning to merge with a sole proprietorship or limited partnership, it may be more appropriate to structure the deal as a corporate acquisition of the assets owned by the proprietorship (a noncorporate entity).

However, as another example, when two corporations seek a merger it may be appropriate for a new corporation to be created as part of a consolidation deal. Here, this newly created business entity would acquire all shares and assets of the two previously-existing companies.

Assign Leadership Roles of the New Company

In many business merger scenarios, defining a new leadership structure can be a challenge. The issue is especially pronounced in cases where leaders from both previous companies have differing ideas on how the newly-merged entity should be run. Without swift and decisive alignment of mission and vision from the leaders of an organization, a newly-formed company will struggle to achieve maximum performance and output.

Some companies rely on professional arbitrators and mediators, as well as business consultants, to advise on how to best structure new leadership within a merged organization. When conflicts and issues begin to create legal obstacles, business attorneys are often contacted to provide further insight and guidance.

Pay Attention to Company Cultures

Compared to financial records and operating budgets, the culture of a company is more of an intangible factor that ebbs and flows along with other aspects of contemporary society. When a company culture is supportive and inclusive, it can create a sense of intrinsic motivation and loyalty among workers.

During the course of a business merger, it is important for the leaders at both companies to take the time and assess how their different company cultures will mesh once the merger is completed. Sometimes, working with the human resources departments of the separate companies can help in developing a new set of norms and values that incorporates the cultures of the two previous companies.

Assess Operating Costs

When planning a merger, it is important for business owners to look at the weighted average cost of capital for both organizations, as well as income and cash flow statements. Issues with operating costs should be addressed, and plans for remediating these issues should be solidified prior to the completion of the merger.

Perform Due Diligence

Performing due diligence on any company that is being considered for a merger is an important step that helps business owners identify any liabilities they may inherit by merging with a company. Examples of liabilities include tax debts, legal judgments, and liens on business or personal property associated with the business. All of these liabilities can follow an old company into a new merger. Performing an effective due diligence inquiry is imperative to any merger consideration, and experienced business attorneys can assist in this process.

Get Professional Legal Counsel

For years, the attorneys at Coepio Legal have been assisting Bay Area business owners with the complex process of planning for a merger.