The next time your business entertains the idea of merging with another small business or even a larger corporation, it may help you reach the end of the process successfully to know what the usual steps of a merger are.
Starting – and finishing – a corporate merger requires the careful handling of numerous details, the juggling of several common issues, and a significant amount of elbow grease to boot.
Fortunately, your business managers can educate themselves on the usual steps to avoid last-minute confusion and work through the merger with complete confidence.
For a starter guide, take a look at these five typical steps you can usually expect to see when working on making a major corporate merger happen.
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1. Assembling a Team With Comprehensive Merger-Related Knowledge and Experience
At the core of every successful corporate merging effort is a well-qualified team. The first step in any merger is assembling an extensive team filled with knowledgeable and experienced company employees or contractors. Make sure your merger team includes professionals such as:
- Accountants
- Financial advisors
- A business broker or several
- Human resources training officers
- C-level executive heads
- Specialized business consultants
2. Understand Your Personal Metrics for What a Successful Merger Entails
Not all mergers look the same, so it’s important to understand what a successful merger would mean to your business. Try setting personal company metrics and goals such as:
- Boosted market share and economies of scale
- New company-owned intellectual property
- Access to more services and products that you can then add to your line-up
- Elimination of a top competitor or two
- Expanded reach into contiguous markets
3. Research Possibilities for a Straightforward and Organic Merger
Another key step in any corporate merger is choosing the right company to merge with. Spending additional research time on this step could be well worth it and eliminate other complications later on. Some possible contenders for your merger could include:
- Possible up-and-coming competitors
- Strategic allies who offer complementary products or services
- Companies that could increase your business’s overall valuation
- Companies with similar missions and corporate values or cultures
4. Assess the Financial Situation Realistically and Understand Your Limits
Before deciding to go through with a merger, your company should do a prolonged, thorough, and realistic check on its financial health to understand the potential limits of the merger. In particular, ensure your company takes into account and can afford:
- A down payment
- A payment plan
- Current liquidity
- Current assets to be used as collateral
- Realistic total purchase amounts
- New company valuations pre- and post-merger
5. Organize the Merging of Operations and Processes Down to the Smallest Detail
In a merger, no stone should be left unturned and no detail should be left unchecked. Your company will need to spend ample time on the organization to make sure all operations and processes are merged smoothly. To accomplish this, you might need to:
- Set time-constrained milestones for the merger
- Understand the different operations and departments that need to come together
- Make sure all teams involved are given accurate and consistent information
- Avoid delays at all costs and triple-check the smallest of details
- Consider all aspects of integration, from financial to cultural factors
Whether your business has its eyes set on another company to merge within the near future or whether you simply want your higher-ups to be informed and prepared for the eventuality of a corporate merger, knowing the five basic steps to accomplishing a merger successfully can help make the process less daunting and more achievable.
From assessing the financial records to assembling a knowledgeable team to setting straightforward milestones to checking all operational details twice and more, these steps can help your business make it through its next merger with confidence from start to finish.