Starting a business is a lengthy and often complex process. It is also a process that requires many serious decisions. Even when a business is rolling and well established, many vital and tough decisions will still need to be made. For businesses seeking to expand, planning a merger might be in the business’s best interests. However, this process needs to be completed by carefully strategizing and planning the merger from beginning to end.
Why would you want to go through a business merger? Because the business world is always evolving, businesses need to remain relevant, combat competitors, appeal to consumers, evolve to changes in the economy and adapt their business strategies. One way to accomplish all or many of these is by initiating a business merger. This is when two or more businesses are combined. This is also when there is a merger of equals; meaning two companies of the same size decide to move forward as one company. For example, this occurred with Exxon-Mobil.
There are three types of mergers. The first is a horizontal merger. This occurs when companies that used to compete decide to come together to form one single company. The second type of merger is a vertical merger. This is when two businesses that compliment each other merge together as one company. For example, a bottling company could merge with a soda company. The final type of merger is a conglomeration. This is when two companies with completely different products. Such a merger occurred with Louis Vuitton and Moet and Chandon.
There are many reasons to go through a merger; however, the main reason is to save money in the long run. This is done by saving on the cost of production, which is frequently enjoyed in a horizontal merger. A merger is also a great way to generate capital, launch new products and even help with competition with other companies.
No matter the reason why you want to go through a business merger, it is important to understand the process and how to move forward with it. Because it is a major business deal, it is important to plan it out carefully. Obtaining legal guidance could help ensure it is completed successfully and with your rights intact.
