Business Mergers: 4 Things To Consider Beforehand

Business mergers can be very advantageous and lucrative for all parties involved. However, before finalizing an agreement, there are a few things all business owners should consider.

The Name Of the Business

In the case of most business mergers, the new partnership results in a new corporate name. In some instances, the new business name reflects both entities entering the agreement. Coming up with a new name can be tricky, because everything from the corporate mission to branding needs to be considered. The new name should help to retain customers from both companies, as well as draw in new client accounts.

Existing Liabilities And Business Mergers

Not all businesses are free of liabilities during mergers. Some have outstanding loans. Others may have contracts with third parties that need to be retained or bought out. Some may have yet to fulfill large orders with clients for receivables which were promised before the agreement was drawn up. Before entering a business merger, both sides need to assess any existing liabilities to figure out which ones can be zeroed out, and which ones will have to be carried over after the merger is finalized.

Assets

Assets can both reduce costs and add to the pool of talent and working capital. In the case of business mergers, equipment should be analyzed to see what can be kept and what can be sold off before it becomes redundant or a sunk cost. Additionally, human resources need to be looked at carefully. Some employees and teams can greatly benefit newly merged businesses. Others may not work well in the new organization, or they may simply take up too many resources and money to justify with the new direction the post-merger business is taking. The same can be said of facilities, office space, and vehicles, as well.

Financing Business Mergers

Business mergers require financing which can be arranged quickly and provide the working capital needed to sustain cash flow. Since business mergers are time-sensitive, entrepreneurs tend to look outside of bank loans for sufficient and efficient financing. Maintaining an ample source of working capital is necessary to ensure a smooth transition during a business merger, so usually a combination of private loans, asset based lending, and working capital solutions are used.

At BG Capital Funding Solutions, our team has the years of experience in handling business mergers to provide the financing needed to help things go smoothly and quickly. Contact our offices today at 702-605-3100 to learn more.

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