As a savvy business professional, you know that one of the ways to grow your business is through merging with or acquiring other already existing businesses in Tennessee. The merger and acquisition processes, while often mentioned together, are very different at their core. Deciding which option is best for your business requires a deeper understand of how these processes differ.
According to the Small Business Association, the main difference between a merger and an acquisition is that in a merger, you combine your business with the other business, but in an acquisition, you take over the other business. This may seem subtle, but it actually has a major impact on your business moving forward.
With a merger, the company you merge with and your company become a new company. You will have to draw up new documents and agreements. You will need to come to agreements and work with the leadership from the other company. It is a cooperative effort where you will work together from here on out, depending on the agreements you made during the merger.
With an acquisition, you take over the other company and just make your company bigger. The other company no longer exists when the acquisition is complete. You may also acquire workers or decide to let them go. If you keep on workers, you may need to retrain them. You will also have to introduce them to your company’s policies as they may be different than those of the company you acquired.
As you can see each option is distinct. If you want the most control, then an acquisition is probably your best bet. However, a merger is often more agreeable and can provide you with insight from the leaders of the other company. This information is for education and is not legal advice.