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What Are Some of the Risks That Come with a Merger or Acquisition?

What Are Some of the Risks That Come with a Merger or Acquisition?

Uttam Sharma 441 28-Jul-2021

by Alex Schnee

While a merger or acquisition can be one of the best choices when it comes to growing a business or mitigating the competition, they are not without their risks. As a business owner, one of the best things you can do going into a deal like this is to do some research into what can go wrong so you can prepare and keep things in order as to the best of your ability.

Here are just a few of the risks that can pop up when you are dealing with a merger or acquisition.

Contract issues

Not knowing what terms you actually agree to in your contracts can cause some major problems, which means that you need to put extra care toward your contract lifecycle management. If you find that your contracts are in a bad place after you have already signed them, then you are likely going to have to deal with the consequences with those terms. Making sure your contracts are in order can be one of the best things you can do make sure your business deal goes the way you want it to.

Lack of attention to culture

Putting two different companies together can sometimes mean exponential growth and can help you stand out, but it can also cause some major problems when it comes culture fit. If you haven’t developed a plan to come up with a new company culture and to talk about how everyone is supposed to handle vacations, work hours, and more, then you are going to want to do this before any major changes happen.

Unexpected costs

What many companies don’t understand is that a merger or acquisition can be quite expensive. You are going to need experts who can help you with your security, drafting contracts, helping your companies merge, and more. If you don’t go into it with the attitude that you will have to pay some money in order to get the deal done right, you might be shocked at how costs can add up. This is why you might want to look into how you can have a flatfeet when it comes to services rather than having them charge by the hour. You’ll also want to make sure to talk to your new partner on how these costs will be covered.

A volatile market

Sometimes, a merger or acquisition is completed in order to keep the business alive in a market that is struggling. This can be a major risk when it comes to making sure that your business succeeds without you there or when there are multiple people involved. Be prepared that it might take a while for your business to take off in the way you are hoping when the market is difficult.

In summary

A merger or acquisition can be one of the best things you can do to grow your business, but it might also mean that you have to think ahead to avoid some of the risks. With these in mind, you can make good decisions that will help your new company benefit in the future.

Uttam Sharma

Uttam Sharma

Olympic gymnast Gabby Douglas is best known as the first African American to win the individual all-around event. She also won gold medals for the U.S. in the team competitions at the 2012 and 2016 Summer Olympics.

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