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Virtual General Counsel LLC

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Struggling small business may benefit from a merger

| Aug 22, 2018 | Mergers & Acquisitions |

Sometimes a small business in Denver finds itself mired in financial difficulties. It may find the costs associated with manufacturing its products have gone up. Or, it may find that its customer base is shrinking. Small business can also suffer if there is an increase in competition. What this comes down to is that small businesses in these situations will want to remedy them as quickly as possible, and one way to do so is through a merger.

Mergers take place when two companies join together to establish an entirely separate new business. Once the new business is formed, the original companies no longer exist. There are a variety of reasons why mergers may benefit small businesses; especially those that are struggling to keep their doors open.

One benefit of a merger is that it may help the small business expand into a new market, perhaps within a wider geographical area or a special industry niche. Mergers may also allow the business to provide better service to its customers. This happens when the two merging businesses target the same customers but are not in competition with one another.

A merger may also provide the funds to develop new products. Another advantage of a merger is that both businesses benefit from gaining the leadership of talented employees or officers. Finally, mergers may lower the costs of producing and distributing the company’s products, as well as increasing the revenue earned.

Mergers can be beneficial to small businesses. They provide a means for businesses to experience more financial success as a joined unit, rather than separate units. While it is usually mergers between two conglomerates that generally make the news, small businesses also frequently undergo mergers that are to their benefit. It is important to understand that mergers are complex business endeavors. Therefore, they should not be undergone without professional guidance.