Your Guide to Business Mergers
If you have been looking for ways to grow your business, you might be considering a merger with another company. These business mergers can be a great way to gain access to resources, increase your market share and decrease costs at the same time. Although there are several benefits for your business, there are some things you should know before agreeing to a merger with another company.
There are many things your company can gain from combining your resources with another company. Many companies enjoy the access to personnel, resources or equipment that may otherwise be difficult to gain access to. Mergers allow two companies to share personnel, equipment and even office space without increasing expenses. Since you will be sharing all of these fixed assets, you will be able to cut costs and put money into the things your business needs or new ventures you have been considering.
Additionally, business mergers provide a way to increase your market share without putting in the grueling time, energy and money that would be otherwise necessary. This sharing of customer databases will vastly expand your marketing network unbelievably fast. In this same way, it can also provide you with a shortcut into other markets that you have been considering.
Regardless of your reason for the change, mergers will require some kind of financing. There are a number of financing options available to you. A common means in which business owners find financing for business mergers is through a loan that is provided against their business assets. These assets, whether it is equipment, inventory or accounts receivable, are collateral for the lender’s peace of mind.
There is also the option for equity financing, in which the lender is given shares of the company in exchange for financing. This will essentially provide part ownership in the company in exchange for the loan. Another financing option that may be useful to you for business mergers is to utilize is mezzanine financing. Although it is similar to equity financing, it is certainly not the same. The loan is based on the value of the company and in the event that it cannot be repaid, the lender would gain ownership of the company.
You may choose to merge your business with another for any number of reasons. There are several ways it can benefit your business and increase your productivity and bottom line. Whatever your reason for the merger, you should be knowledgeable about your options in financing it.