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Things to know before a business merger

One way companies commonly look to expand their business is through mergers and acquisitions. With proper execution, this can be very beneficial. However, poor implementation may lead to more issues than profit gains.

It is important to fully understand the process and have a set plan in place to succeed in this type of venture. If you are considering a business merger, there are a few things you should be aware of and implement throughout the process.

Solidify the why

Any good plan requires a solid reason for choosing it. Therefore, any business owner should approach a merger opportunity with a clear vision of how it will benefit the company moving forward. Otherwise, the decision may not be in the best interest of the company.

Compatibility

How compatible are the two companies? This is a question any business owner should ask before completing a merger. One way to think of it is as a marriage. As the two companies become one, it is important to make sure each party's assets receive proper care. Otherwise, issues may arise in the future that can lead to detrimental losses.

Due diligence

Each party should do their due diligence in making sure the other party is legally, financially and morally sound. If due diligence is not done during the vetting process and results in loss, it is possible for the business to file a liability suit. Depending on the type of infraction, certain individuals may be responsible for the issue and held liable, according to Michigan law.

Exit plan

In the case that the merger does not work, a business should have an exit plan in place. Returning to the marriage analogy, though you hope for a lasting relationship, it is in the best interest of the business to have a separation plan in place should it not.

These are just a few key things to consider before your business merger. Make sure you review these factors, as well as any others that concern you, to ensure you make the best decision for your company.

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