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Critical considerations in a merger

Mergers can be a great strategic tool for Florida businesses looking to increase financial capacity and reach a larger audience. However, poor execution can lead to disaster. The Institute of Mergers, Acquisitions and Alliances reports that nearly 14,000 companies announced mergers or acquisitions in 2014. Of those, experts say that nearly 30 percent will not live up to expectations.

To ensure a successful integration, there are several tasks a business owner should do, starting with reviewing the missions and cultures of the two businesses. While the factors do not need to be exactly the same, they should be compatible. Further, it is imperative that the merger can deliver clear and tangible benefits. Reviewing financials and projections for success is crucial to setting reasonable expectations.

Industry experts also recommend doing the following:

  •       Starting integration activities early in the process
  •       Keeping all negotiations open and honest
  •       Outlining the resources necessary to complete a successful transition

The Federal Trade Commission’s Bureau of Competition is responsible for preventing a merger that will result in a disadvantage to the consumer. The agency notes that under law, larger companies that are merging or acquiring a new business must report the deal to the FTC. Failing to do so can result in significant consequences.

Lastly, before starting a transition, a business owner should identify key talent and develop a plan of action to keep those employees. As a report in the South Florida Business Journal points out, workers who are not brought into the plans properly may become disgruntled and leave. Make for a smoother integration by getting everyone on board with the plan.

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