You are undoubtedly proud of the work you have done in building a successful Nevada company. As your company has matured, you have worked to provide well for your family and keep your stockholders happy. Perhaps you have already taken advantage of circumstances to grow your company by opening new locations or expanding your services or goods, but you may be alert for a new opportunity.

If you have learned of a company that is struggling or a business owner who is ready to retire, you may be considering the idea of combining your business with this other company. You have two options: a merger or an acquisition. The circumstances will determine which is most appropriate for you.

Pros and cons

Merging two companies can be quite complex. Your company and the other business essentially become one new business entity. This is often a process that both businesses agree upon and achieve together. On the other hand, an acquisition occurs when your business takes over another company. This may happen if you purchase the company’s assets or if you gain control of its shares. An acquisition can occur in cooperation with the other business or through a hostile takeover. Some reasons for mergers and acquisitions include the following:

  • To diversify your company’s interests or offerings
  • To provide a balance of market sectors by joining with a company from another industry
  • To protect your company from recession in the U.S. by merging or acquiring overseas companies
  • To open access to financing that was unavailable to you
  • To offset profits or losses in order to gain tax advantages
  • To streamline operations or budgets, particularly if your small firm combines with a company of a similar industry and scale

Of course, merging or acquiring another business is not without its risks. You may not be able to predict how well the two units will function as one, and complications may directly affect your bottom line. Additionally, if the business you acquire is already floundering, your company may not be able to sustain its own success while holding up the new entity. If your shareholders or partners become nervous during the transition, they may hold you accountable.

To improve your chances of a successful merger or acquisition, you would be wise to have a legal professional by your side every step of the way. With an experienced advocate, you may be able to avoid missteps and mistakes that could be costly in the long run.