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Is a business merger always a good idea?

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Many Florida business owners look for opportunities to grow their entities and make them more competitive in their respective industries. While hard work and capital investment can make a business extend its reach into the market, there are other ways of making businesses bigger players. One way that a business can grow is through merging with another company.

A business merger occurs when two or more businesses join together and become a single entity. When multiple corporate entities join forces, they must work together to determine what kind of new structure they will use, how their financial management will happen, and who will run the day to day and big picture operations of their fledging organization. If companies cannot agree on these terms, the merger may not be in their interests.

For example, if one company wants to simply fold another into its operations without preserving any of the other’s employees or processes, the merger may be detrimental to the merged parties. This process may actually be an acquisition, in which the acquired entity effectively disappears into the other. Similarly, if one entity carries many debts, has pending litigation, or is struggling in its operations, then the other entity may wish to hold off on joining with it to avoid taking on those pitfalls.

Business mergers should only be undertaken after careful review and planning. It can be enticing to merge with another business to grow one’s operations, but not every prospective business merger is advantageous to all of the parties. A business law attorney should be involved in the merger process to ensure that it is in the best interests of their client.