Is Merging with Another Company Right for Your Small Business?

Image Source:  flickr

Image Source: flickr

A business merger is when two companies join forces to become a single larger company. You might know this already, of course, as across history, many mergers have taken place between larger companies. Here are some famous examples. Sometimes, it makes perfect business sense to merge with a company. However, would it ever be right for your business?

As we discussed in a previous article, mistakes can be made, so despite the advantages that a merger can afford you, you might also find yourself in difficulty. It's a tough call, but let's consider why you might want to consider a merger in the first place.

You will increase your chances of survivability in business

Life is tough for the small business owner, and the business failure rate is high. However, if you find another business owner willing to merge with you, then you will both have a better chance of surviving in the competitive marketplace. By joining forces, you will automatically reduce the level of competition, as chances are, you will be working with a former business rival. And by working together, you will be a stronger force for other competitors to reckon with.

You can rescue your struggling business

If your profits are low and you are struggling to stay open, then merging with another company could be a life-saver. Provided you have something to offer the other business owner, such as a specific set of skills or a product idea that they could help you turn into a reality, then they might be willing to join forces and merge with you.

You have the opportunity to grow

In a very literal sense, you will see growth immediately. By merging with another company, you will have a larger customer base to sell to and you might also see an increase in employees, as not only will you have your current workforce on your side, but you will also have employees who were previously engaged with the other business. You might be able to move into bigger premises too, with technologies in place that you didn't possess already. With greater resources, you will then have the opportunity to reach new marketplaces, create better products, and increase your profit margins. The opportunities for growth will be many.

So, merging with another company is a no-brainer, right? Not necessarily, and these are the reasons why.

It can take a long time to merge with another company

It's not something that will happen overnight. It can take between 6-months to a year to transition, with all of the legalities and paperwork processes that will ensue. While you can streamline much of what you need to do with a mergers and acquisitions data room, you still need to expect some disruption to your usual business day. As a consequence, you might have less time to focus on your existing customers, and  in the short-term, that could hurt your business.

You might merge with the wrong company

Do they have a good reputation? Do they behave ethically? Do they share the same company culture ideas that you and your employees are used to? You need to think carefully before merging, as if you do make the wrong choice, it will be very difficult to rectify any problems once you have finally consolidated because you will no longer be the only person in control.

So, is merging right for your small business? It might be, but not without some thought before doing so. If you are currently considering a merger, or if it is something you might be interested in somewhere down the line, do the necessary research first to ensure that it really is the best option for your business.

Let us know what you think.