Building a business usually requires patience and perseverance. In time, as your enterprise grows, you may decide to join forces with another entity. Before beginning the process, you will need to examine several factors to assess the transaction. Here is more on what you need to know before your business merger.
What is a Merger?
A business merger involves one business joining another and creating a new enterprise. By contrast, an acquisition occurs when an entity acquires another. When companies merge, they combine their assets and liabilities.
Leadership, Personnel, and Business Mergers
One area to consider when evaluating a business merger is leadership and personnel. Depending on the size and complexity of your new venture, your employment needs may change. In some circumstances, this may require adding positions. In others, you and the merging entity may determine that it will be necessary to streamline your workforce. Likewise, your new formation may need to make leadership changes.
Timing a Business Merger
Another area to consider is timing. A business merger opportunity may seem appealing. However, if the timing is off, it may not be in your business’s best interest to move forward with the merger. If you are considering a merger, you should consult with an experienced Florida business attorney. Your business lawyer can assist you with assessing your existing enterprise and determining if it’s in your best interest to merge with another entity.
Evaluating a Business Merger
Before taking steps to initiate the merger, you will also want to take the time to evaluate the potential transaction. One of the process’s most important tasks during this process is arranging for a business valuation. The business valuation will give you an accurate assessment of the other business’s value and financial health. You will also need to complete your due diligence regarding the other entity and its representations. Your Florida business attorney can help you determine the steps you need to take to thoroughly evaluate a potential business merger.
Creating a Merger Agreement
The Florida Business Corporations Act has certain requirements that must be met when two companies want to effectuate a merger. You will want to work with an experienced Florida business attorney to ensure that you are in compliance with Florida law.
In addition, you and the other party will want to enter into an agreement that includes specific terms. Some of the areas you will want to address may include the following:
- The business valuation method you will be using
- Price and details regarding payment
- Employee-related terms
- Tax-related terms
- Debts and other obligations
- Intellectual property
- Existing contracts
- Other relevant matters
Your merger agreement is essential, and it’s vital that you with an experienced Florida business attorney when creating this document. Your business lawyer can help you ensure that your contract complies with the law and includes provisions that protect your interest.
Existing and Governing Documents
Another matter to consider is whether there are existing governing documents. For example, your business may have an agreement in place that requires that officers or stockholders agree to a merger. You may also have employment contracts that this type of action could impact. You and your business attorney can review any existing or governing agreements to help ensure that your actions are in compliance.
Deciding whether or not to merge with another entity involves several important issues and variables. Depending on the specific details of your transaction, you may need to consider these and multiple other factors. By working with a Florida business attorney, can help you ensure that you have the advice and support you need before, during, and after your merger.
Contact an Experienced Florida Business Lawyer
Attorney Richard Sierra at the Florida Small Business Legal Center assists clients like you with commercial leasing, business, and litigation matters. As always, Our Goal Is to Help You Succeed™. For an appointment, you may call us at 1-866-842-5202 or use the contact form on our website. We represent clients throughout the State of Florida, including Coral Springs, Coconut Creek, Boca Raton, Delray Beach, Pompano Beach, Sunrise, Fort Lauderdale, Miami, West Palm Beach, Jupiter, Deerfield Beach, Stuart, Port St. Lucie, Orlando, Naples, Fort Myers, Sarasota, Tampa, and surrounding communities.