You may be like many Georgia business owners who are facing some hard facts about today’s economy. On the other hand, you may be among those who managed to forge ahead despite recent unprecedented events that caused many other businesses to close. No matter your circumstances, you may agree that pooling your resources is one way to remain viable in any economy. Many companies find that mergers and acquisitions offer such benefits.
Acquiring or merging with another company each offers its own advantages, but both have a common downside. They are complex and delicate matters to handle, and it is not always certain at the end of the process that you will reach your target with your assets intact. This is why it is critical to learn as much as possible about the steps involved and secure quality legal advice and guidance along the way.
What’s the difference?
Mergers and acquisitions are two different actions, and either action may involve resistance and other challenges. A merger occurs when two companies combine to form an entirely new entity. Generally, both parties are agreeable to the merger, and they each become equal partners in the new company. You may consider joining with another company that offers similar products or services, or you may take the opportunity to expand your company’s reach by merging with a company that offers something new.
Acquisitions are not always so friendly. In fact, the business world often refers to acquisitions as “takeovers.” In general, a larger, more financially stable company purchases a smaller, perhaps struggling company. Sometimes, this involves purchasing a significant portion of the smaller company’s stock, but it may also occur through negotiations with the shareholders.
Things to consider
Mergers and acquisitions can also be actions that a struggling company can seek to avoid bankruptcy or other financial setbacks. A merger or acquisition may be attractive to a profitable company because of the potential for tax advantages since losses from the struggling company may offset profits from the larger one. If you own a business that is considering merging, you may be hoping for this and other advantages, such as streamlining some departments.
However, when rushing through a merger or acquisition to obtain the benefits, it is easy to overlook the risks. You may have a great deal on the line and possibly significant assets to protect. Mergers and acquisitions involve complex areas of the law, including real estate, finance and intellectual property rights. Having a skilled and experienced attorney on your side throughout the process can be a wise decision.