Studies vary, but there is no denying that a significant number of businesses in the U.S. have heavy family involvement. Keeping the business in the family has several advantages. Who is more trustworthy than a close family member?
However, the harsh reality is that many family businesses don’t survive. It can be hard to scale up a company when it remains solely within the family. This is where corporate mergers come into play.
As the name suggests, a merger involves two or more businesses blending together to form a distinct legal entity. What are the potential advantages of this for a family business?
Cutting costs
While it’s certainly not always the case, family businesses may comprise a smaller network. They may only have access to certain vendors and could lack negotiating power. A merger can improve this situation, significantly reducing costs.
Becoming more competitive
Virtually every market is highly competitive, and this can be tough for family businesses. Merging companies can significantly increase market share, allowing a family business to tap into markets that would have been previously impossible.
A merger can be a lifeline
A merger can provide a much-needed lifeline to a struggling family business in terms of a cash injection and increased expertise.
Other potential benefits of a merger include:
- Better distribution networks
- Increased brand awareness
- A more diverse workforce
The right type of merger doesn’t mean surrendering your family business to a stranger. Rather, it can act as a supplement that ensures your continued growth. Of course, before making any commitment to merge, seek legal guidance. We are here to help.