Making the decision to merge and acquire a business is a big step for both the acquiring company and the acquired company. But there’s a real temptation to rush the process and combine your companies so you can start seeing profits from the new business. Unfortunately, rushing can lead to serious mistakes that can have a long-term impact on the business’s profitability and sustainability. Here are a few of the most common mistakes that buyers and sellers make that your Milwaukee business attorney wants you to be aware of.
Not Cleaning House First
When you’re merging your business with another company, you’ll want to do a bit of “cleanup” before the takeover is complete. Go through your records, documents, and any other paperwork that you think might benefit the new owners. Pull those items out and make them accessible to the new business owners. This can help ease the transition for your remaining staff and could make it easier for the new owners to keep your company running the way you know it should.
Not Having a Plan for Integrating New Practices With Established Procedures
Rushing the transition can make things harder for the business’s existing employees as well as any new employees that the acquiring company brings into the fold. Before taking over officially, make sure you have a plan in place for integrating the new changes and policies you want to implement into the established procedures that work for the company as it is. Not sure where to start? Consider consulting with the senior leadership that will stay with the company as well as the current owners if you’re comfortable discussing things with them. By working together and creating a strategy that works for everyone, you’ll ensure a smoother transition.
Not Doing Enough Due Diligence Prior to the Purchase
Mergers and acquisitions are major business decisions. You need to make sure the company will be lucrative and help you remain profitable for years after the acquisition. Unfortunately, many business owners fail to do enough due diligence prior to agreeing to the purchase and often only uncover underlying issues that make the business less ideal after closing the deal. Before agreeing to buy a company, take your time and carefully research the company. If you notice any red flags, speak with your Milwaukee business attorney before you proceed.
Overpaying for the Business
It’s in the seller’s best interest to try to get as much money for their company as they can, especially if the proceeds of the sale are going to be used to settle outstanding debts. And paying too much can strain your operating budget for months after you close on the deal. Be cautious before you agree to a set price and let your business attorney review the purchase agreement and contract before you sign anything.
Work With an Experienced Milwaukee Business Attorney
If you’re considering buying a struggling business or are planning a merger with another company, don’t try to go it alone. Contact the experienced Milwaukee business attorneys at Kerkman & Dunn to schedule a consultation. Our team understands the challenges mergers and acquisitions pose to business owners and sellers alike and will work with you to help you get the best deal possible.
