Sometimes business mergers are discussed skeptically, with company leaders worried that mergers only happen when a company is failing. That’s not necessarily true. Mergers typically occur to strengthen business, whether it is to combine forces or for one company to acquire another.

Understanding how mergers work can help you make a better decision in the event you are considering a merger.

Joining forces with another company

One reason your company may be merging with another is because you and the other company have decided that it is in the best interests of both companies for you to join forces into one company. This may be done to fill a knowledge or skill gap in one or both companies, to compete more effectively in the industry, or even to freeze out competition. When your company is involved in this kind of merger, both companies will do an in-depth analysis of the company to provide information for the merger. It is important for both sides to ask questions and give clear answers so both companies can work together once the merger is complete.

Acquisition by another company

Another reason a company will be involved in a merger is because they are either acquiring another company or being acquired by another company. When your company is being acquired, you will need to provide a detailed analysis of the company, including financial information, for the acquiring company. There will be a lot of changes to occur in the company, as well, since your company will be part of the acquiring company instead of an independent company. If your company is acquiring another company, you will need to ensure that you have all the information you need, including financial information, and develop processes to incorporate the acquired company into your own company structure and processes.

Whether you are considering joining forces with another company, acquiring a business, or being acquired by a business, mergers can be beneficial to business. By pooling resources and processes, a merger can help your business achieve its goals and objectives.