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A small or mid-sized business might consider a merger

On Behalf of | Jun 28, 2022 | Business Transactions

Although it is only the largest mergers that get the attention of the national news, mergers and acquisitions are common among New York and New Jersey businesses.

No matter what line of business they are in, small and mid-sized organizations in Bergen County or other parts of the Tri-State area might consider a merger or acquisition for many reasons.

While “merger” is often used in running speech, the term refers to when two or more companies come together to form a new organization. An acquisition, on the other hand, involves one company buying another company.

The sold company will either cease to exist or will operate as a subsidiary of the purchaser.

Businesses might consider merging for a number of reasons. Sometimes, for example, a business will merge with or acquire a competitor in order to get a larger share of the market. In this case, a horizontal merger might be a good option.

A horizontal merger may also reduce competition in the market and give the buyer, or the new company in the case of a true merger, access to additional capital and resources.

A business may also consider a vertical merger, by buying one of their vendors for example, to consolidate their operations and get access to supplies the business operation needs.

Organizing a merger or acquisition requires attention to legal detail

Even if the merger or acquisition is between two private businesses, the process will involve a number of legal details. It is important for a business to pay careful attention to these details.

These legal issues might arise from the moment one business starts to consider a merger seriously until the transaction has been completed.

Without the proper attention, a merger or acquisition may not yield the economic benefits it seemed to promise. In some situations, the end result of mistakes in the process could be litigation or other serious legal problems.


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