Understanding the Mergers & Acquisitions Process

Hand Mergers and acquisitions are often considered synonymous, but these methods of joining companies do differ and can mean different things for your business. An acquisition occurs when one company takes over another; once purchased, the target company essentially ceases to exist. During a merger, two equally sized businesses decide to form a single new company together. For an ideal merger or acquisition, the joined company should have greater value, efficiency, and market share than the sum of the two businesses separately. A knowledgeable business lawyer in Wichita can work closely with you throughout the mergers and acquisitions process.

Assess Your Finances

A business attorney will advise you to rigorously evaluate your company’s financial health, including debt, capital funding, and liquid assets. Especially if you are purchasing another company, you will need enough liquidity to make the acquisition successful. Valuation of both businesses is also essential in order to accurately determine the worth of each and to ensure a fair transaction.

Define Your Goals

What do you hope to gain through a merger or acquisition ? Do you want to outmatch a competitor? Is your aim to acquire new intellectual capital? Do you hope to increase market share? Your business lawyer can help you answer these and other questions about how the transaction may lead to meeting your objectives.

Research M&A Candidates

Most business law experts will tell you that it’s important to establish your goals for a merger or acquisition before focusing on particular companies to pursue. If you become fixated on a business first, you may fail to recognize its true value or overlook other viable candidates. The companies you consider should also be able to integrate with your operational and organizational structure. Once you’ve done your due diligence on the candidates’ finances, staff, technology, and operations, you can determine which is the best strategic fit.

Keep Employees Informed

It’s best to be transparent and communicative with staff on both sides. Mergers and acquisitions typically do require a reduction in workforce in order to eliminate redundancies, so be upfront in order to quell rumors and uncertainty. A business attorney can help you navigate these sensitive employer-employee relations. You will also want to establish a transition team that includes leaders from both sides so that you can anticipate challenges and ensure a smooth integration.