Can A Merger Save My Business in this COVID-19 Era?

Although some young entrepreneurs I’ve mentored in the past frown at the thought of joining forces with another complimentary entrepreneur/s to form a synergized company. During this current COVID-19 economic slowdown, I see more small-business owners using mergers as a way to flourish.

 “It is much more difficult for small companies to remain independent and grow in a recession. In tough times, small companies need size, bargaining power, increased distribution and decreased cost”, says Jim Freeman, an investment banker.

My experience in bringing two small businesses together is getting their typically strong–willed owners to cooperate. While I use financial logic, the entrepreneurs let their ego get in the way. They struggle who will be the CEO of the business and so on.

In this COVID-19 pandemic, if you think that a merger might be the way to go for your small business, sit down and make a list of competitors whose products or services might mesh well with yours. Decide whether the owner is someone you could work with. If you absolutely hate the person, or don’t like his/her personality or lifestyle, don’t even consider making an approach. It might manifest later in the business.

Once you have decided on a business and the owner, it is usually preferable to have a consultancy talk with one or two experts. Orchestrating a successful merger is like getting married. Initially, you may be attracted to each other and have similar interest, but everyone has a different way of doing things.

After you find a business that may be compatible, ask yourself these questions:

§ What is the synergy between our businesses? Do we serve the same customers? Are our product and services similar?

§ How could our combined business increase sales?

§ Are our management styles compatible?

§ Which company has a better facility and location?

§ Who will head the business and other management roles?

§ What should the merged business be called?

§ What kind of contracts do we sign?

§ Where can we find the best business advisers to structure the deal?

§ Etc.

 If things look optimistic, begin to negotiate, while consulting the best business experts like a competent attorney, sharp accountant, and someone certified in entrepreneurship management who can envision the best way to present and grow the newly merged business.

Dear startups, try not to let your ego get in the way. Been a CEO doesn’t bring in the money. If you and your merger partner take on different areas of responsibility, you can end up in a stronger and more stable position than before when you were alone.

What enterprise idea are you working on? Are you having any challenge with your small enterprise? Talk to Ada Africa. Would be available to answer your questions and walk you through. Trust me, you will go places. Recognize what God has called you to be, accept the gifts He has given you and start building on them!

Local2Global (L2G) with Ada Africa


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