If you are considering merging with another business or even buying out a company, there are certain things that you need to know about that company. You don’t want to have any surprises after the deal has already been made. Hiring third party companies like small business valuation services or mediators is always a good idea so that there are witnesses and second opinions along the way the entire time. A merger especially, is a big thing. You are putting your own reputation on the line in order to join with another company so you need to know exactly what that company is and who they are before going into business with them. You don’t want to have any regrets once the deal is already done. So, before signing on the dotted line, here are a few things that you should know before going through with a merger.
- The Reason
Because of the time and money that it takes to merge, there can be some major problems if it isn’t done right. You should know exactly why you are merging or going through with the deal before you do it. You should have a written plan of what your goals are and what you hope to achieve as well as within what time frame. Knowing the answers to these questions will help you to understand what kind of company you are looking to merge with. Basically, you have to understand yourself and what you are looking for in the future of your business before you can help anyone else understand.
- The Business Valuation
You’ll need to know the value of the company. Small business valuation services can assist you in obtaining the financial information and data that you need in order to go into business with someone. Papers such as income statements and balance sheets for the previous three to five years is always a good idea. Small business valuation services will be know what data and information you need to meet the goals you have. Keep in mind that business valuation tools and methods vary from company to company so you may have to shop around a little before finding a service that you are satisfied with. All the information should be obtained openly and legally. If the company you are looking to merge with is making it difficult for the service to get their hands on any records, this should be a red flag.
- The Company Cultures
This isn’t as important if you are buying out a company because you can adapt their culture into yours over time as you run the business. However, if you are planning on making a merger, you want to make sure that the two cultures are compatible. Clashing cultures can ultimately destroy either one or both of the businesses. Ensure that there is equal value and respect stemming from both companies so that you know your workers will taken care of after the merger takes place. There would be nothing worse than realizing after the merger has gone through, that your original employees are being mistreated. You could end up losing key players which could cost you the entire business all together.
- The Legal Side
Along with hiring small business valuation services, you will want to look into hiring a lawyer to look over all the legally binding wording of the contracts. Language such as ‘good faith’ etc are up to a judge and jury to interpret the meaning. It is highly recommended to retain the services of a good business lawyer with a stellar reputation who can look over the contracts before either party signs. This way, if anything goes wrong, the original lawyer is on retainer for you to consult with and possibly represent you if necessary.
If you know these four elements before getting started, you will eliminate a lot of room for mistakes and error. There really is not a whole lot of room for regret when making a decision like this. One wrong move could cost you your business. So, ensure that all your bases are covered and that the company you are merging with is trustworthy and not hiding anything and you should be good to go.