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What to consider before engaging in the merger process

| Mar 11, 2020 | Business Law

A merger occurs when two business entities combine into a single company. In many cases, one company remains intact while the assets and liabilities of the second entity are absorbed into the remaining organization. There are many issues that a company owner in New York or elsewhere might want to consider before engaging in such a move. For example, it is important to consider whether a merger is a good strategic fit for the company.

This is true whether it will be the core of the new business or whether it will be absorbed by another company. It is also important for business owners to determine whether the other business involved in the deal shares their values and vision. There are many steps that generally must be taken to complete a merger or other type of acquisition. Before the deal can be finalized, all relevant parties are encouraged to perform due diligence.

Due diligence involves looking at a company’s financial statements and other records to determine if a deal is beneficial to both parties to the merger. It may also be necessary to hire a broker or other intermediary to help with the transaction. He or she might help create a fair market value for the company that is being acquired.

Business owners who are considering a merger may want to consult with a business law attorney first. Taking such a step may help entrepreneurs better understand how the process works, how long it can take and if it is the right move for their organization to make. An attorney may help a company prepare financial statements and other paperwork related to such an event. A legal representative may also help a business owner obtain regulatory approval to move forward with the deal.

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