When Business Mergers Work (And When They Don’t)

Business mergers are a great way for businesses to experience immediate growth, as opposed to taking several years to expand a customer base and incoming revenues. In some cases, business mergers allow companies to join forces and reap the benefits of their combined resources, thus quickly increasing their market share, and benefiting from their combined clout. However, no merger should ever be entered into without thorough due diligence on the part of both companies, and strong consideration for what each brings to the table.

When mergers work

As mentioned above, business mergers can be very beneficial when two companies combine to create a larger, more powerful company in the same market. Another scenario where a merger can be very successful is when one company has decided that it simply wants to sell the business to another company, and leave the business altogether. If you try to position your company for this kind of merger, you should spend some serious time beforehand in making your company look very appealing to a buyer. That means managing your cash flow very well, dropping products that don’t sell well, keeping current on all taxes, and cleaning up your financial documents to demonstrate maximum stability and profitability.

When mergers don’t work

One of the scenarios which is least attractive and often the least successful, is when a competitor to your company attempts to buy out your business, simply for the purpose of eliminating you as a rival. This is a very tricky situation which you will have to uncover through detailed research, so that you aren’t misled by inaccurate statements on the part of your competitor. Anytime a merger is motivated simply by price, the likelihood of a successful conclusion is not very strong.

Thinking of a merger?

If you are considering a business merger, but lack the funding to make it happen, we may be able to help. Contact us at 5 Star Funding Group, and let our financial experts consider your circumstances, so that we can explore ways of helping you accomplish your merger.