Manage Your Merger with the Experts at M & A Consulting
Uniting two existing companies into a newly formed single entity is whats known as a Merger. While the general public hears of mergers between mega-enterprises every once in a while, the reality is that these transactions are actually an incredibly common business practice. Whether the goal is outright expansion, getting ahead of competitors, gaining market share or simply to please shareholders, mergers are completed to create value. Common merger ideology dictates that 1 + 1 should equal 3. That is, the newly formed company's value should be MORE THAN the combined value of the companies that merged to create it. While this can't always be the case, having a strong advisory board or consultant during the process will put the odds in your favor. This is where we come in. Our M & A experts have the experience and know-how to ensure the utmost satisfaction upon closing the deal. We employ by-industry professionals that stay shoulder to shoulder with you through every step of the process, even after completion, to make sure the transaction is handled fairly and reaps the maximum benefits.
Types of Mergers
It is important to keep in mind that not all mergers are the same. There are many reasons for mergers to occur, and with that in mind many different types of mergers. Depending on the companies involved and the reasons behind the proposed deal, mergers are typically categorized within these five types:
Conglomerate Mergers - Involve the merging of companies that partake in completely different business activities. Can be further categorized as pure or mixed.
Pure - Companies have NOTHING in common
Mixed - Companies with similar products/services that seek market extension or product extension
Horizontal Mergers - Involve companies that exist in the same industry, and is more or less a consolidation.
Market Extension Mergers - Similar to the mixed conglomerate merger, This transaction involves companies that sell the same product in different markets looking to create a bigger market.
Product Extension Mergers - Also similar to the mixed conglomerate merger, this is when companies that sell related products that go well together combine.
The Merger Process
Corporate Mergers are a process that is often heard of, and seldom understood. There are various phases that both companies must pass through before any paperwork is signed to close the deal. While Mergers and Acquisitions share many of the same stages, a merger usually ends in a restructuring of the surviving company as a newly formed entity. Individual state statutes (which establish procedures to accomplish corporate mergers) have been put in place and apply to most merge deals. While the details of every merge may be different, the general process remains the same.
Generally, the very first step in a merger is the meeting of the controlling parties or board of directors for each company. During this phase, the merge is discussed as a hypothetical.
If the initial meeting is a success, the next step requires the involved companies to, in unison, adopt a plan of merger. This plan must specify the names of the companies involved, the proposed name of the newly merged company, how the shares of the involved companies will be converted, and all other legal provisions that the companies agree on.
Each Corporation must then notify all of its respective shareholders of a meeting to approve the merger plan.
The approval/denial meetings are held.
If the appropriate number of shareholders approve of the merger plan, then the directors of each company sign the paperwork, and file with the state.
The Secretary of State must then issue a certificate of merger to authorize the new corporation.
The real intricacies of the merger process lie within the details of the merger plan, and the negotiation that may take place if shareholders cannot agree upon the set plan. This is why consultation with M & A experts is crucial. Detailed analysis of both companies as well as the market(s) involved help in creating a structured, well received plan for all parties involved. Our team not only focuses on the trade aspect of the merge, but the well being of the surviving company after the deal is done. Keeping an eye on the future is the key to a successful merge.