Pulling off a merger or acquisition that ends in prosperity is not a simple task to undertake. Business deals such as these require thorough planning, due diligence, and legal counsel to ensure everything goes as smoothly as possible.
During this stressful and exciting process, it can be all too easy to allow some important questions to slip your mind. To better protect your interests during a company merger or acquisition, there are multiple questions to which you need answers.
What To Ask Before Signing Off on a Company Merger or Acquisition
Prior to signing off on a merger or acquisition, double-check that any special considerations have been addressed, such as those involving franchise agreements, intellectual properties, and common assets. Do not put pen to paper until you have obtained answers to the following six questions:
Have You Done Enough Due Diligence?
Purchasers must thoroughly evaluate and determine the true value of their target company. This means appraising any assets that will be acquired in the transaction and, more importantly, any liabilities attained. This investigation may be complicated and laborious, especially when pinpointing a price for the deal and forecasting future growth. Be sure to complete a careful assessment of the extent to which the current management team is capable of developing and growing the enterprise after the acquisition.
What Are the Defects of the Company’s Assets?
Examining a seller’s financial, marketing, operational, and legal systems is a complicated but essential process. Knowing the operational and financial health of the target company and its franchise network is key to a successful merger or acquisition. However, one of the most important assessments should be of the target company’s defective assets. This process comprises analyzing not only the target company’s assets and internal arrangements, but also their various and diverse relationships within its own franchise network.
How Well Is the Franchise Genuinely Performing?
As obvious as this question may seem, this is a consideration you do not want to overlook as no other analysis is more meaningful. Make sure you closely scrutinize the unit-level operational and financial performance of your target company. If the brand is struggling, the company will likely undergo little financial growth, and its positive qualities may possess little to no value.
What Federal and State Regulations Need to Be Considered?
When acquiring a company, there are federal and state laws that must be observed. Typically implemented as a means of protecting local markets and supporting healthy competition, failure to comply with these regulations can result in severe consequences. Other parties may even be provided with the right to pursue remedies for damages, which could negatively impact the value of assets to be acquired in the merger or acquisition.
What Is Upper Management’s Level of Skill?
The skills and experience of senior-level executives can positively or negatively affect a buyer’s investment decision, depending on their vision for the future, as their leadership can make or break a company’s success.
Are the Franchisees Pleased?
Confidence and trust in the leadership team of a franchise’s brand are highly indicative of a strong, healthy franchise system. Gather information from franchisees to identify strengths and weaknesses in the company and establish areas of strain and opportunity.
Grow Your Business With an Experienced Merger and Acquisition Attorney in Utah
Successful mergers and acquisitions require considerable analysis and due diligence. Various strategies, tax, and other considerations must be considered before finalization. As a veteran entrepreneur and lawyer with solid experience in mergers and acquisitions, Attorney Jeffrey Cardon will work to protect your interests through every phase of the deal, from beginning to end.