For many small to mid-sized Minnesota business owners, there comes a time when they choose to retire, perhaps to move or even to open a new business. This often means the sale of their current company, and this may include the option for mergers or acquisitions.
These are specialized types of business sales transactions. merger and acquisition companies typically also offer traditional types of business sales services, which allows them to offer a full range of services for business buyers and sellers in their areas of specialization.
Mergers
Mergers are a type of consolidation between two different companies to form one company. The two companies are typically related in some fashion, or they complement each other and enhance the value of the products or services of the merged entity.
For example, merger and acquisition companies may work with a company that manufacturers food items and a company that packages and markets foods. This merger may be effective since both the product and the service complement each other and can help both in reducing costs and boosting marketing potential.
With a merger, it is not uncommon for both companies to continue to operate with their own management and operational teams in place, and this may actually be a part of the merger agreement.
Acquisitions
Acquisitions are more of a purchase or a takeover of one company by another. In this situation, it is common that the sale is 100% and that the acquiring company will manage or control the other company to create one company functioning as a single entity.
Typically, with an acquisition the company making the purchase will assume management roles of the acquired company and in some cases the existing management team may be given the opportunity to continue in their role or they may be replaced.
There is also the option to have a consolidation. This is different than either of the above options and includes two equal companies to come together to become a single entity that is more of a permanent partnership. With a consolidation, as with a merger, it is often more of a combined management model with retention of employees.
Working with merger and acquisition companies that are able to advise, inform and recommend options for the merger, acquisition or consolidation of a Minnesota company is essential. These can be very complex agreements that can have significant long-term impact on not just the business, but also employees, and understanding the short and long term issues with these options will be critical.
