As a business owner, keeping your company profitable is always a priority. Unfortunately, some businesses may not be successful, and when this happens, many business owners find themselves facing a choice: go out of business or merge with a more successful company. There are benefits and downsides to both, but opting to merge with another company can be a great choice.
While working with an experienced Milwaukee mergers and acquisitions attorney is always in your best interest, you need to make sure that a merger is the right choice for your needs. Here are a few of the pros and cons you can expect when merging with a new company.
Helps Avoid Closure
If your business is struggling or you’re considering filing for bankruptcy to manage large amounts of debt, merging with another company can help. The other company’s finances can cover your outstanding debts, so your company can effectively stay open, even if it’s under a different name. In a way, this helps preserve the legacy and values you’ve worked so hard to build in your brand.
Opens Your Company to Better Growth Potential
Even successful businesses can end up stagnating. Once this happens, your business (and the accompanying profits) may either grow slowly or may not grow at all. By merging with another, possibly larger company, you’ll increase your business’s growth potential. You can leverage the connections your new parent company has to get your products or services in front of more people.
Eliminates Competition
Competition strengthens the market, but it can also make it harder for your business to thrive. By merging with another company in the same or a complementary space, you can reduce your competition. Instead of competing against each other, you’ll work together to further grow the business and strengthen the reach of the brand. That means more customers coming to a single service provider rather than having to choose between your company and the competition.
Preserves Jobs
If your business is struggling, layoffs can help free up capital. However, for many business owners, this is the absolute worst-case scenario. You recognize that your employees are people and depend on your company for their paychecks. In many mergers, sellers are able to add a condition stipulating that the new parent company retain jobs for current employees where possible. This can prevent layoffs and preserve more of your employees’ jobs.
Gives You Less Control
Unfortunately, you won’t retain complete control over your brand or your business after merging. Instead, you’ll split control with the buyer in whatever manner you and the buyer agree to.
Increases the Potential for Culture Clash
The values you built your brand on may not always be shared by the company you’re merging with. This increases the chances of a culture clash where your current team may struggle to align with the new company’s values. Depending on the severity of the clash, you may end up losing valued employees to new opportunities.
Is a Merger the Right Choice for You?
Ultimately, merging with another business can strengthen your company if you’re struggling to make the impact you want in your industry. However, before you can decide if a merger is the right option for your business, you’ll want to speak with a mergers and acquisitions lawyer in Milwaukee.
Contact the team at Kerkman & Dunn today. Our experienced mergers and acquisitions attorneys will review your situation and help you decide if a merger is in your best interest. If it is, we’ll represent you so you can get the best deal possible.
