A business is an entity that produces and sells products and/or services for profit. Businesses can range in size from small-scale sole proprietorships to multinational corporations that operate across many industries and continents. They can be for-profit enterprises or nonprofit organizations fulfilling a charitable mission or advancing a social cause. A business can also include a variety of structures and organizational arrangements, including partnerships, joint ventures, and limited liability companies.
The legal consolidation of two entities is commonly referred to as a business merger. In a merger, two companies that are comparable in size or market value join together into one company. The purchasing company typically keeps its own identity and name, while the other company is dissolved or becomes a subsidiary. The purchase may be “friendly” or it may be a hostile acquisition, in which one company benefits more than the other.
Regardless of whether a merger or acquisition is being pursued, it is crucial that all stakeholders are kept informed about the process and its implications. Keeping staff in the loop will help to reduce anxiety and keep projects on track, as well as prevent negative impacts to morale or productivity levels.
A successful M&A requires rigorous due diligence, which involves a deep dive into the financial health of potential targets to ensure that projected costs and benefits are accurate. During this time, it is critical that any risks or concerns are addressed in order to avoid unexpected surprises down the road.