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Identifying key factors for a successful merger

When two companies merge in Ohio, opportunities and possibilities may seem limitless, from growth and diversification to eliminating the competition. The team at Baker, Dublikar, Beck, Wiley & Mathews has experience assisting clients with business acquisition and mergers.

According to Small Business Trends LLC, identifying key factors and testing for feasibility is critical to a successful merger.  

  • Are the products or services complementary or competitive? If the offerings are synergistic, the newly formed organization can expand the existing company’s market share. Conduct market research by asking several current clients if they would buy the other product or service and dig into why or why not. When offerings are too similar, you may end up cannibalizing customers. If that is not the goal, a merger may not be the right move.
  • Have you given adequate time for the merger to show results? Blending two companies, from personnel to marketing and back office functions frequently takes much more time than anticipated. This can lead to dissent, finger pointing and a failed merger. Examine the profitability and growth of each organization and reduce expectations by half for at least six months. This can be a more accurate assessment of post-merger profitability.
  • Are the management teams a good match? While eliminating duplicate managers and departments is common, there should be clear leaders in the new organization that are culled from each company. The successful blending of the two business cultures can help valuable employees thrive in the new environment, which can help maintain the stability of the new business entity.

Conducting a deep dive into finances, the customer’s perspective and daily operational aspects of each company can help you decide if a merger is the right move. Negotiations may include everything from stock options and legal structure to the new company name and board of directors. Ensuring the transaction details are handled appropriately can be a complex process. Visit our webpage for more information on this topic.