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Looking to Merge Your Small Biz? 5 Ways to Make the Transition Smooth

Anica Oaks

July 31, 2015

The business world is a place filled with mergers and acquisitions. Every day, companies buy out other companies. As competitors are eliminated and businesses merge together, new business opportunities are realized and forged. This leaves many small business owners wondering if they are ready to take this huge step forward. More importantly, if the opportunity arises, will a merger turn out to be a real success for your company or a complete disaster? The following are a few tips to help a company's merger execute more smoothly to ensure a successful outcome.

Understanding Your Company's Financial State

Before you consider taking the plunge and merging with another company, it is critical to comb through your company's finances. Mergers can be a costly matter, and it does not stand to reason to push for a merger if your company simply is not able to afford pushing through. Among the factors you will want to keep close tabs on is the liquidity of the two entities being merged.

Mergeability

Pulling off a successful merger involves way more than simply wanting to invest in the combining of two business entities into one. Compatibility is often a major obstacle to a lot of mergers. For example, two companies may function well on their own, but there may be significant issues in trying to merge the two companies because of the systems with which they operate. Two companies that use radically different software to perform similar tasks may run into all sorts of IT hang-ups. The way two companies handle logistics may also prove to be challenging in a merger. Making sure all these fine details are ironed out ahead of time is key to the success of the merger.

Retaining Management

Another key area of consideration is determining if you want to hold on to preexisting management. An extensive evaluation of the other company's management will reveal which managers will be worth keeping around and which ones you should let go. When keeping a manager on board through the merger, it will often encourage better synergy between both companies if you provide the managers you want to hold on to with some incentives to make the merger proceed smoothly. Remember, you want these individuals to perform in step with your merger goals, even if they are not extremely enthused with the idea.

Legal Matters

When it comes to merging with another company, it is inevitable that this process will give rise to legal issues. Having competent attorneys to help with business restructuring and developing contracts will be an essential component to a smooth merger process. You never know what sticky legal can of worms a merger will open up. With a law firm such as Doré Law Group in Houston, TX, providing professional legal support, most of these unforeseen pitfalls should be possible to avoid.

The Transition Team

While both companies are heavily involved in making the merger happen, it is important to have a transition team in place. According to Americanexpress.com, a transition team will provide solid leadership at a time when it is most needed for both companies involved in the merger. Getting people to do things in a timely manner and ensuring that everyone is on the same page will be quite a feat. This is where your transition team is needed to provide critical insights to anyone who may not be certain what their role is and how to properly execute their role in line with the intended goals of the merger process.

A merger is a major event in a company's attempts to move forward. From monetary concerns to system integrations, careful planning and oversight are needed to ensure that the merger is being carried out correctly. When everything falls into place, a new dependency will emerge between the companies involved in the merger that will help them to operate as a unit to achieve their economic and financial goals together.

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