How Acquisition or Merger Can Help Your Business Expand

Ensuring Corporate Documents' Enforceability - What to Know

10/03/2022

If you want to expand your business, you can acquire another entity or merge with it. Choosing either of the two is similar to creating a new business but requires a few more steps. You might wonder which alternative would work best for you.

With the increase of competition and the limited resources, business owners need to learn how to manage and direct their limited resources to compete effectively. Opting to acquire or merge with another entity may be more economically prudent than a traditional expansion.  

Most of the time, entrepreneurs and managers gather all the available information before making any decision, which is why you need to finish reading this article. Doing so will help you make an informed choice.

What Is the Difference Between an Acquisition and Merger?

If you were to ask corporate lawyers about the two, they would tell you that there is not that much difference. However, depending on the circumstances, the terms may seem somewhat complicated. In practice, business acquisitions and mergers are just two words that define the same concept. Their differences lie in the process itself.

The term merger means that the two entities fuse to become a new company. On the other hand, if one business acquires another organization, the purchased entity will cease to exist. The acquiring corporation will absorb it.  

What Happens Behind Closed Doors?

If you acquire another business or merge with it, you may want corporate lawyers to handle the negotiations. Yes, you may have a solicitor under retainer, but take note that this deal is far more complicated than most attorneys can handle. 

Corporate lawyers have the experience and the know-how to ensure that you get the best deal possible. If you have one, your solicitor can still help with the negotiations, but, likely, he will not put it all together.

To acquire a business, you have to come up with a strategy. Everything should be plotted out in advance, including your counterpart’s value and the acquisition price (or merger). You need to compute the assets of both parties to determine if the deal is worth it.  

The goal is to establish a company that has a good reputation, a client list, and a stable cash flow. The new entity should have a solid reputation to help you gain more clients. The client list will also help you expand your business. 

How Do the Negotiations Unfold?

The corporate lawyers will prepare contracts for the negotiation to move forward. The solicitor will draft a sales agreement if you merge with another entity.  

The process will begin once the buyer and the other party agree on the contract terms. Corporate lawyers will represent each side of the deal. The solicitor will discuss the agreement with you and your team, taking note of your input. 

He will make proposed changes based on your recommendations. Both parties will review the changes and sign the contract. After the agreement has been signed and both parties agree on the terms, you can do the paperwork and exchange goods or services. 

Conclusion

This article is merely an introduction to the business mergers and acquisitions process. Remember that the process is sometimes not as smooth as it appears. You will have to deal with the paperwork and get the necessary approvals from the government and other organizations to complete the deal. 

To ensure that the negotiation will run smoothly, consult with GLG Legal. Our team of expert corporate lawyers will help you through every step of the discussion. Call us now!

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