For many small businesses increasing income and profitability, especially in today’s economic climate, sounds like manna from heaven. However, it is not only feasible but in many instances makes perfect sense. Merging two businesses into one entity can increase market share, reduce competition and open up new markets.
Gerald Irwin of Sutton Coldfield based Licensed Insolvency Practitioners and Business Advisers, Irwin Insolvency said, “Many entrepreneurs who grow their businesses through successful mergers are currently reaping the benefits. One the one hand, it is getting ever more difficult to obtain lines of credit and loans from banks which is putting innovative businesses at risk. On the other hand, an ideal merger will increase revenue and reduce overheads thus enabling the new entity to attract more capital and increase the value of the equity stake. Merging can also present the opportunity to team up with others who bring their own vision, management and technical know-how to the table.”
It is essential for both parties to consider that merging results in the combination of assets and liabilities. Therefore, the due diligence process is the time to work with outside experts to discover and detect business information valuable for the decision making process.
In each and every analytical exercise there are benefits and risks. Obtaining beneficial business results via merger depends on a combination of brains, guts and heart but these qualities are already inherent in today’s entrepreneur.