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Mergers and acquisitions are an exciting, and sometimes essential, development that companies go through.

On the surface, these business deals are pretty simple and straightforward. A merger happens when two companies combine to form a new company, while an acquisition is the process of one company purchasing another, essentially absorbing them.

But as simple as it sounds, the road to a successful merger or acquisition is often a rigorous and overwhelming one. Approaching it with the wrong strategy or even the wrong people can make or break the success of the transition.

Why do mergers and acquisitions happen?

Let’s explore why these deals happen in the first place. Generally speaking, they are often brokered when two companies are perceived to be more valuable than one. And businesses can reach that point in their operations for a number of reasons.

Perhaps your business wants to expand operations. Maybe you need expensive manufacturing that another business already owns. Maybe you want to secure a certain technology platform, but don’t want to build it from scratch.

In these scenarios, it would make more sense for your business to find another company with the needed capabilities already in place.

Mergers and acquisitions are also a great way to cut costs. Your company can combine locations with another business and in turn, reduce operating expenses. In some cases, these deals can also save your business from going under.

If you’re looking to reduce competition and enter new markets, these business dealings are also a viable option. Companies often kill competition by purchasing rival companies, ensuring a stronger foothold in the industry.

The opposite also applies: your business can go into a merger and acquisition to diversify your offerings, entering new markets and gaining new customers in the process.

How to have successful business dealings

If you’re considering this venture for your business, there are things you have to put in place before moving forward with the deal.

  1. A proper strategy

First, you have to determine why your business needs to go through this process. The reasons listed above are some of the common causes, but you might have entirely different motivations.

From this introspection, you have to set goals and make decisions. Don’t forget to take into account everything from location to kinds of products, the state of the industry, and even cultural fit.

  1. The right people 

One of the first things you have to do is hire a business law attorney who will help you with the business and legal requirements of a complex structural change like this.

Because as hard as it will be, you should make sure to only have the right people after the transition. Don’t take too long to establish leadership, make sure that everyone has the potential to work together, and strive to have the whole company on the same page. 

  1. Clear communication channels

In a merger or acquisition, the most important things to achieve (and also the most difficult) are effective communication with employees and a successful integration of both business cultures.

Major changes like this can lead to a lot of uncertainty and to an extent, a lack of trust. So make sure to communicate constantly with your team. Don’t underestimate the effects of a merger or acquisition on employee morale and culture, and take measures to ensure as smooth a transition as possible.