A merger is a massive change for any business. It can lead to a significant increase in profits in the long run, but in the short term it has the same potential to cause problems as any other change. Fortunately, proper planning and quick action stop most of those problems before they start. As long as you keep a few broad techniques and goals in mind, you can be confident that you will avoid most of the financial risks associated with a merger.
1. Sell Redundant Assets
When two people get married, they usually find that they have two of every appliance, so they get rid of the spare. When two businesses merge, they often find themselves in the same position. Ever merger will result in the new organization having redundant assets. In some cases, it can be worthwhile to keep those assets as backups in case some are lost in an accident. This is most often the case when the assets are easy to store and have no ongoing costs. When that is not the case, they become liabilities.
Selling those excess assets can be a great way to raise money and reduce costs at the same time, according to Financial Business Solutions, Inc. After the merger is finalized, take a complete inventory of your assets. Use that inventory to make a list of excess objects. Sell all of the excess goods that you can, unless you can expect to save money by keeping some of them around as replacements for the ones that are going to be in use.
2. Examine Your Taxes
Mergers can often complicate the tax requirements that a business faces. Many states levy special taxes on them, but mergers can also open up new discounts and tax credits. If the merger significantly changes the size of the business, it is likely that it will enter a new tax bracket. A business that takes the time to study the tax code can minimize the expenses associated with the merger and take advantage of every offer that can reduce its tax burden. In the long run, that can save a great deal of money, so much so that some mergers are motivated by a desire to save money on taxes.
It is usually best to look for specialists that can give you tax advice after a merger. The laws that govern mergers are so complicated than many accountants and lawyers try to avoid working with them, which means they lack the experience to get the best results. Hiring a specialist will cost a little bit extra, but the savings that they can provide will usually be more than enough to justify the expense. Even people who don’t expect massive savings can benefit from a specialist, simply to remove the risk of getting into legal trouble for making innocent mistakes.
3. Integrate Records Quickly
Very few people enjoy keeping records or handling paperwork, but it is necessary for businesses to see success. Both businesses will bring records into the new company, and those records will provide valuable insight to their history. Looking through those records is a good way to see which businesses practices have been successful for each business in the past, and that will tell you which practices should continue in the future.
Unfortunately, every business uses a different system of organization. Working with an unfamiliar system will waste a lot of time for workers, so it’s best to combine all of the records into a unified system as quickly as possible. Doing so will maximize worker efficiency and ensure that no information gets lost in the administrative shuffle.
4. Balance the Workload
Consider reassigning employees in the aftermath of a merger. Shifting a member from an over performing team in one business to an underperforming team in the other can help spread valuable experience through the company, leading to higher productivity in the long run. If one team has an excessive number of projects to handle, it can also be prudent to transfer some of those projects to a team with a lower workload. On the other hand, there is a risk that disrupting a successful team will lead to further losses. Transfers are powerful tools, but they do need to be used with care. Do your research before deciding on a transfer, and always be ready to reverse a decision if it turns out poorly.