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Acquisition considerations for purchasing businesses

On Behalf of | Jul 1, 2015 | Mergers & Acquisitions

In order for many different types of businesses and industries to grow and thrive, it is often crucial that they expand and evolve. Mergers and acquisitions are the key to success in many cases; however, the benefits of acquiring a business or corporation can be compromised if the transition is not properly conducted. Discussed below are only some of the factors that should be taken into consideration when merging two business entities.

Discussing the many different aspects of acquiring another company, Workforce Magazine explains that it is always important to consider how such business practices affect employees. Issues concerning employee retention should be evaluated prior to, during and after acquiring a business so that no unnecessary losses or expenses are incurred. Depending on whether or not the acquisition is based on the purchase of intellectual property and/or hard assets or is intended to facilitate the adoption of particularly skilled workers, employee retention may or may not be a major issue. It is also helpful to consider some of the unique and perhaps yet-to-be identified talents that are joining the team. Retaining top management should not come at the cost of overlooking other valuable contributors.

Once the human aspect of the acquisition is accounted for, there are several other considerations to address. According to Forbes, it is the responsibility of the party making the acquisition to act with due diligence during the process. Exercising due diligence in such transactions can include but is not limited to:

  •          Auditing the acquired company’s financial statements
  •          Identifying any and all domestic and/or international patents
  •          Taking inventory of current and prospective intellectual property
  •          Understanding the customer base and potential customer retention issues

Therefore, all of the financial and logistical components of the merger and acquisition should be taken into consideration in order to avoid unnecessary conflicts and even litigation in some cases.


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