Mergers & Acquisitions for Small Businesses in South Jordan, UT

Simplifying One of the Toughest Parts of Business

Mergers and acquisitions are a common occurrence in the business world. They allow companies to grow and evolve and provide business owners with greater resources and opportunities to expand their corporations. They also allow developing and emerging companies to survive and thrive under new ownership. Mergers and acquisitions can be positive experiences for everyone and, in many cases, are end goals for business owners. 

If you are a business owner who is currently considering or about to go through a merger or acquisition, especially if you have never completed one before, it can be vital to hire the services of an experienced mergers and acquisitions attorney. The right legal counsel can ensure successful outcomes for all parties involved and allow business owners to enter exciting new phases of their companies’ growth and development. They will know what potential issues to look for, identify potentially missed opportunities, and ensure what can be an incredibly complex and potentially difficult process moves as efficiently as possible. 

What are Mergers in Utah?

A merger is a type of business transaction in which two or more companies unite to consolidate their resources to form a new, singular business entity. In a merger, one or more companies purchase another company or companies, with the businesses combining to form a new entity. 

Typically, a merger happens when one or more businesses agree to be purchased by another business. The reasons for this can vary, and may include but are not necessarily limited to:

Market Expansion

A company may merge with another company in order to expand its geographic territory and customer base. For example, a small business that is succeeding in the Southwestern US may wish to merge with another small business that is enjoying similar success in the Northeastern US in order to move into that region of the country. 

Businesses may also wish to merge with companies in other countries for cross-border expansion and international transactions. A business may also wish to benefit from another company’s success in capturing a target demographic. For example, a clothing company that has succeeded in marketing its product lines to teenagers may wish to merge with another clothing company with a successful product line targeted toward middle-aged consumers.

Diversification

Another motivation for merging may be diversification. Diversification is expanding a business into manufacturing new products or offering new services. For example, a company that sells stereo equipment may merge with a company that sells televisions in order to form a new business that offers a more diverse array of consumer electronics. 

Companies may also wish to diversify which clients they serve by merging with another company with different consumer demographics. For example, a car manufacturer may merge with a motorcycle company to diversify the array of automobiles they can offer and potentially capture a new market share.

Talent Acquisition

Companies may merge because one or both desires access to the others’ talent roster. Two advertising agencies might merge in order to combine their respective creative departments in order to better sell products. A technology company may wish to merge with another company whose R&D department is making advancements or developing innovative solutions in areas they wish to pursue. 

By merging and combining their talent pools, companies can further corner their respective markets and make advancements in development, sales, and other areas. Talent acquisition mergers may also come with the added publicity benefit of bragging rights. Individuals who have distinguished themselves within their professional fields may have a positive reputation within their respective industries, and companies who employ them may be able to benefit from having these individuals in their employ. 

Resource Acquisition

Similar to talent acquisitions, companies might merge in order to obtain access to one another’s resources. This can include technology, intellectual property, geographic space, manufacturing or distribution facilities, product lines with built-in brand recognition, and more. 

Vertical Integration

Vertical integration is the acquisition and incorporation of components in a company’s supply chain. For example, a business that publishes a print magazine might merge with a printing company so that all printing can be done in-house instead of paying an outside company. A business might also merge with a shipping company to handle distribution in-house rather than use a third party. Vertical integration can reduce overhead, potentially increase profit, and allow a business to have more oversight and quality control over various aspects of its processes.

Economies of Scale

Economies of scale refer to the reduction of overall costs by expanding the scale of operations. For example, a larger corporation may be able to make bulk purchases of products that reduce cost over making smaller purchases. A larger company may also be able to manufacture larger and more diverse runs of consumer products to enhance profits. 

These are only a few of the examples of why companies may wish to engage in mergers. Business goals will vary according to the specific companies involved. Mergers are usually mutually beneficial experiences that see a smooth transition of business into a new, more productive, and more profitable future. 

What are Acquisitions in Utah?

An acquisition is another type of business consolidation. Like a merger, an acquisition involves the combination of two or more companies. However, in an acquisition, one or more larger firms purchase one or more other companies, thus gaining control over their resources and operations. No new business is formed. The company or companies that were purchased cease to exist, and their resources, talent, and operations are folded into the purchasing company. 

An acquisition may bring about multiple changes in the new company, including but not limited to:

• Corporate Restructuring
• Changes to Executive Compensation
• Changes in the Handling of Corporate Governance Matters
• Changes in Employee Benefits
• Changes in Risk Tolerance

There are different types of acquisitions depending on the goals and needs of the acquiring company. Some types of acquisitions include but are not necessarily limited to:

Horizontal Acquisitions

A horizontal acquisition is when one company acquires another company in the same industry in an effort to eliminate competition, consolidate resources, acquire talent, or expand market share or cross border influence. Well-known examples of horizontal acquisitions include Disney acquiring Pixar animation and Meta acquiring Instagram.

Conglomerate Acquisitions

Conglomerate acquisitions occur when a business acquires another business in a completely different industry. These are strategic transactions that allow a company to expand into entirely new operations. One example of a conglomerate acquisition was Amazon’s acquisition of Whole Foods. One of the most famous conglomerates is perhaps Procter and Gamble, which owns companies that sell toothpaste, pet food, home cleaning supplies, and more. 

Vertical Acquisition

A vertical acquisition occurs when a company acquires another company for purposes of vertical integration. For example, in the 1980s, Exxon, which was successful in oil refining and sales, acquired Superior Oil to obtain access to their exploration and drilling resources. 

Market Extension Acquisitions

A market extension acquisition is similar to a horizontal acquisition, but the companies involved are not competitors or even in the same marketplace. This often occurs when a company in one country or geographic territory acquires a company in another territory or country for cross-border expansion. For example, a European automobile manufacturer may acquire an American automobile manufacturer to expand into the North American market. 

What Are Important Things to Consider Regarding Mergers and Acquisitions in Utah?

Merging with or acquiring another company can be an exciting way for a business owner to grow and expand their company while also taking advantage of exciting opportunities. Being acquired by larger companies can also be a way for small business owners to see a generous financial windfall and enter a new phase of their careers. 

Both mergers and acquisitions are incredibly complex procedures requiring much knowledge about corporate law. A business engaging in either a merger or an acquisition must have a broad range of legal expertise and knowledge regarding business matters, strategic planning, and other legal issues, including corporate governance issues, human rights, and more. Many small businesses do not have in-house legal counsel. 

In some cases, small business owners may have been serving as their own representation. Many small business owners may have some legal experience in dealing with smaller matters like negotiating employee benefits or contracts with vendors. Most of the time, these business owners are able to obtain successful outcomes for themselves in these circumstances. However, mergers and acquisitions represent a new and more complex challenge for small business owners. 

The realm of corporate law is extremely complex. Attorneys experienced in corporate transactions and mergers and acquisitions possess a highly specialized knowledge and skill set. They will be able to draft contracts, perform due diligence, make detailed negotiations, and ensure the process goes as smoothly as possible. They will also be able to identify and aid a business owner in navigating potentially unforeseen circumstances related to a merger or acquisition. 

Some challenges that may face a business owner during mergers and acquisitions may include but are not necessarily limited to:

Due Diligence

A deal that seems positive or constructive initially may turn out to have hidden risks or liabilities one or more parties failed or neglected to disclose. This could include pending lawsuits, product issues, or other factors that might prove detrimental in the long run. An experienced attorney will know how to properly vet all businesses taking part in a merger or acquisition so there are no unexpected surprises.

Cost/Benefit Analysis

A merger or acquisition that seems to be a good deal may not be worth as much as it initially appeared. A business may have overstated its value to make more money on a sale. This could lead to a business overpaying for an acquisition. Experienced attorneys will be able to perform a comprehensive cost/benefit analysis and determine if a merger or acquisition is beneficial in the long run and whether the amount being paid or offered is commensurate with the actual value.

Security Issues

Cybersecurity is an increasing concern in mergers and acquisitions. Over half of all companies engaged in mergers and acquisitions cite security concerns as a major factor in their decision-making. Acquiring or merging with a company that has security issues could potentially lead to major problems in the long run. It could even potentially endanger the future of your own company. An attorney will be able to vet the security of a given company and help determine whether fixes can be implemented and whether the implementation of those fixes would be cost-effective.

Unrealistic Expectations

It may initially appear that a merger or acquisition could have a greater impact on a company’s future than would necessarily be the case. A business owner may initially believe that a merger or acquisition could lead to a successful expansion into new territory, allow for greater market dominance, secure the company’s future, or more. 

In some instances, a business’s goals and aspirations may not necessarily be met through a merger or acquisition. Experienced attorneys can comprehensively review your business plans and goals and help you determine whether a merger or acquisition would necessarily prove beneficial in the long run.

Culture Clash

Some businesses have strong corporate cultures, which may not necessarily be conducive to a merger or acquisition without radical changes. Depending on your goals and aspirations, this may prove to be a greater effort than it is worth, and changing corporate culture may inherently alter the company in ways that negate the benefits of a merger or acquisition. A skilled attorney can put together a portfolio on any potential issues regarding culture clash you may expect to face and help you determine whether that potential clash is worthwhile in the long run. 

These are only a few potential issues a small business owner may face in a merger or acquisition. A successful merger or acquisition can be an incredibly rewarding experience and represent a new step in the growth of a small business or the expansion of a small business into a larger one. This is why it’s important for every small business owner currently considering or going through a merger or acquisition to hire law firms with a background in corporate law. 

What Should I Do if I’m a Small Business Owner Interested in or Going Through a Merger or Acquisition in Utah?

The right attorney will be able to make mergers and acquisitions move as smoothly as possible, eliminate any risks, identify potential unforeseen issues, and aid you in your growth as a business owner. This is why if you or a loved one are a small business owner currently considering or going through a merger or acquisition, you should immediately contact RCG Law Group, located at 489 S Jordan Pkwy Suite 255, South Jordan, UT 84095. 

The attorneys of RCG Law Group have extensive experience in all aspects of corporate law, including mergers and acquisitions. They want to see small businesses grow, thrive, and prosper. They enjoy working with small business owners to help them grow their companies and brands, move into new geographic territories, expand their talent and resource pools, and enter exciting new phases of their existence. 

The attorneys of RCG Law Group love nothing more than being able to play a part in helping small business owners realize their dreams and grow their companies. They pride themselves on being able to predict any potential issues and curtail them before they arise, and help small business owners identify new opportunities for corporate growth. They aren’t happy until their clients have successfully met their business goals and begun a new stage in their careers as entrepreneurs. 

Mergers and acquisitions are excellent opportunities for a small business owner to grow and expand their companies. They can also be challenging experiences involving a variety of facets of corporate law with potentially unforeseen obstacles. This is why an experienced attorney is key to enjoying successful outcomes. If you or a loved one are a small business owner currently considering or going through a merger or acquisition, don’t hesitate to call the attorneys of RCG Law Group at 385-503-3663 or email them for a consultation.