Things to check when considering a merger or acquisition

| Aug 7, 2020 | Business Law

When you were a child, your parents had to tell you to do your homework continually. Now that you own a business, the importance of doing your homework is more apparent. Only in business-speak, it is called due diligence.

If you are thinking of merging with another company, or acquiring one, carrying out adequate checks is vital. These are some of the things you must investigate when considering a merger or acquisition:

  • Client base: Check the status of current client relationships, examine how these customers will fare over the next few years and if they will stay loyal once you enter the equation.
  • Finances: Take time to get accurate data and predictions. Things will have changed a lot in the last six months.
  • Tax: Hire a tax specialist to ensure there are no issues with the tax office.
  • Lawsuits: Don’t let someone else’s problems become your problems.
  • Environmental concerns: Understanding local and federal laws is vital.
  • Contracts: Failure to understand the various agreements the other company has could burden you with unnecessary expenses, or tie your hands behind your back.
  • Intellectual property: Ensure you are getting the rights you thought you were. A failure to protect intellectual property could leave a company worth much less than you thought.
  • Company culture: Some companies work well together; some do not because their culture is too different.
  • Workforce: You need to understand the contracts the current workforce has to avoid falling foul of labor laws.

Do not rush when carrying out due diligence. Oversights now could prove costly later. Seek legal help from an experienced business law attorney to ensure you can proceed with confidence.