If you’ve heard anything in the news about mergers and acquisitions, chances are the ones you hear about are those involving large firms. Mergers and acquisitions can pose certain obstacles for any company, but large firms often have a much easier time with these transactions since they have the resources and experience to work through the process more quickly without too many surprises.
For a small or medium-sized company, mergers and acquisitions can be more challenging. The technical part of the merger is very involved and takes a long time. Here are a few tips for small or mid-size companies partnering for a merger or acquisition:
1) Create relationships between firm leaders.
When you’re part of such a large undertaking, you need to have someone strong in charge. This transaction affects the lives of all of your employees, especially those working at a company that is merging into a parent. Being told as an employee that you must either become part of a new entity or find a new job can be stressful and confusing. It’s important that the leader develops an agreement that everyone is cared for. There needs to be trust between the employees and the people in leadership positions, as well as between the leaders of both firms.
2) Find attorneys, banks, and accountants early on.
It’s important to find out early on who will be supporting you throughout the process. If you wait until late in the process to speak with your bank, they could refuse to support your deal, in which case you will need to find a new bank that wants to work with you. It takes a long time to finalize this switch, so the earlier you speak with a bank, the better. Since mergers and acquisitions involve two companies, you’ll have to make sure the other firm is prepared, too. Make sure both firms involved have attorneys. Some companies surprisingly don’t have corporate attorneys, and onboarding a new attorney takes time. Get your attorney from the start and make sure the other firm does so as well.
3) Make sure the attorney knows the companies and industry.
While there are many experts in mergers and acquisitions, you shouldn’t just get any old attorney that knows about mergers and acquisitions. It is crucial to hire an attorney who knows about mergers and acquisitions in your specific industry. Each industry has its own nuances, rules, and specific forms necessary. The process is much easier when you have an attorney who is familiar with these details. The best attorney is an attorney who is already familiar with your company. This way, the negotiations can go more smoothly.
While large firms often have the resources to help mergers and acquisitions run more smoothly, smaller and medium-sized firms might come across a few bumps in the road. But if you stay prepared and gain all of the resources necessary early on in the process, you will encounter fewer obstacles. Ultimately, you will build a strong business relationship with a new company that puts you in a better place strategically than you were before.