How to Execute a Business Merger without Any Hiccups
Contemplating joining forces with another small business? Thinking that you might benefit from something a bit more formal than a strategic business partnership? Business mergers offer a wide range of benefits and advantages, but they can be difficult to pull off correctly. The following five tips will help ensure smooth sailing.
• Your Team
The first order of business is to assemble your team. You need an internal team comprised of trusted individuals from operations, finance, sales and marketing. You may also want to add external experts to the team. However, the CEO or CEO appointee should run the show here.
• Target Search
You’ll need to determine how you will select potential targets. Business mergers can be initiated by an investment banker working on your behalf to vet options, or it can flow from internal communication and investigation.
Business mergers need solid planning to be successful. Why are you searching for a target? What do you hope to achieve? How will the acquisition help your business move forward and grow?
Valuation is one of the trickiest parts of the merger process. There are many valuation methods, and none are 100% accurate, because the actual value of the business in question is not based solely on the market. There’s also sentiment involved, as well as a degree of subjectivity.
• Financing It All
The final step is to secure financing. You’ll need to structure your financing plan to fit the unique needs and requirements of your specific merger. All mergers are different, so there really is no one-size-fits-all solution here. Creative financing structures can help, but there are also public market options and even company cash reserves may be available.
For more information on how we can help with business mergers, contact Desert Star Commercial Consulting today.