Merging companies
Discussion
I will of course take advice, but I thought the PH massive may have some input.
Two successful companies, one essentially a sales organisation buying from the other, the other producing goods/materials and also selling directly to their own clients.
It would be beneficial to both to join (reduce costs etc)
Both companies very profitable, both over 1m T/O
Where do you start merger talks and discussions?
How does it all work?
Over to the knowledgeable please........
Two successful companies, one essentially a sales organisation buying from the other, the other producing goods/materials and also selling directly to their own clients.
It would be beneficial to both to join (reduce costs etc)
Both companies very profitable, both over 1m T/O
Where do you start merger talks and discussions?
How does it all work?
Over to the knowledgeable please........
Done this, but screbbe64 is probably the expert. Merged two competing businesses in the same field (I was a director of one of them), both t/o near £2m
Interesting exercise, cost shed loads of money with accountancy fees and legal fees!!!! even if all parties are in favour! Every case is different though. Watch out minority shareholders can be a pain!
Initially we drew up a heads of agreement between the two parties signed by all the directors. We then effectively got one company to acquire the other (in return for shares and loan notes) and appointed a commercial solicitor with merger expertise. The other party also needed to have it's own solicitor to ensure everything was done with that companies interest at heart. Same for the accountants, though in our case it was the other way round!
We then effected the 'takeover' and changed the name of this company to the newly merged name
Hope that helps
davidy
Interesting exercise, cost shed loads of money with accountancy fees and legal fees!!!! even if all parties are in favour! Every case is different though. Watch out minority shareholders can be a pain!
Initially we drew up a heads of agreement between the two parties signed by all the directors. We then effectively got one company to acquire the other (in return for shares and loan notes) and appointed a commercial solicitor with merger expertise. The other party also needed to have it's own solicitor to ensure everything was done with that companies interest at heart. Same for the accountants, though in our case it was the other way round!
We then effected the 'takeover' and changed the name of this company to the newly merged name
Hope that helps
davidy
The deal structure is limited by one thing - your imagination!
A lot of it will come down to whether you want to be tied to the other person and whether you can work with them. Do you like each other? How will you handle differences of opinion? Assuming the answer's are positive to such questions and you're comfortable with having a partner, then there comes the discussion about whether it's a straight 50/50 split of the company. 51% is worth a hell of a lot more than 50% (obviously). You'll certainly need to draw up a shareholders agreement with a lawyer, who should ask lots of "what if" questions.
If, as you intimate, both companies are similar in profit then you could agree a simple 50/50 split of shares in Newco. This could then be a case of 1 + 1 = 3 - because of the economies of scale you referred to. Bear in mind that if you are thinking of selling the merged companies there is a two year "taper clock", which means you'll have to wait two years before you can get full tax relief on the capital gain.
Anyhow, if you want more detailed advice please feel free to PM me with some more specifics of your situation.
A lot of it will come down to whether you want to be tied to the other person and whether you can work with them. Do you like each other? How will you handle differences of opinion? Assuming the answer's are positive to such questions and you're comfortable with having a partner, then there comes the discussion about whether it's a straight 50/50 split of the company. 51% is worth a hell of a lot more than 50% (obviously). You'll certainly need to draw up a shareholders agreement with a lawyer, who should ask lots of "what if" questions.
If, as you intimate, both companies are similar in profit then you could agree a simple 50/50 split of shares in Newco. This could then be a case of 1 + 1 = 3 - because of the economies of scale you referred to. Bear in mind that if you are thinking of selling the merged companies there is a two year "taper clock", which means you'll have to wait two years before you can get full tax relief on the capital gain.
Anyhow, if you want more detailed advice please feel free to PM me with some more specifics of your situation.
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