Considering A Business Merger But Worried About Risks? What To Know
Are you considering a business merger with another business in your area but you want to make sure the other business is as successful as yours? Do you want to verify that they aren't going under and they aren't trying to use your business to stay afloat? These are very important things that you need to look into, and a financial lawyer that specializes in working with businesses is the best option. Here are a few things you'll want your lawyer to comb through and create for you, so you are protected in the merger.
If someone wants you to merge businesses, you both should be willing to share all financial documents. This ensures that everything was disclosed before the deal. Have your lawyer go through the following:
- Tax paperwork and past filings
- Accounting records and files
- All banking accounts and transactions of incoming and out going money
- Credit card statements
- Loan documents
With this information, your lawyer can adequately determine how much debt the company has, how much profit they are making throughout the year, and what their financial status is. You should be willing to share this information as well.
Business Merger Contract
The merger agreement will be very detailed, and you'll have to discuss a lot of things in advance about profit sharing, ownership and management responsibilities, division of funds, length of contract and more. You may decide that you only want to sign a single year agreement, and if things don't work out you can both go your separate ways after the year.
You want to know who is going to be running or managing what areas of the business, you have to agree on what accountants to use, what payroll changes may take place and more. The experienced lawyer will help you get everything worked out. You can let your lawyer know you want to do this with as little risk as possible, so they can adjust the contract that way.
If you think that merging the businesses could be a great thing and that it could help you grow your business, sit down with the right legal professional and find out what the risks and drawbacks may be. Once they help you determine if merging will be the right move, and what you could potentially gain from making the merger, then see if the other business owner will agree to your terms.