Merger and acquisition deals (M&A) can help entrepreneurs set their businesses up for growth. These deals can allow for expansion into a new marketplace in a number of ways. Two key examples include:
- Physical. An M&A transaction can allow a business to expand into an area where they do not currently have a store, service or operational presence.
- Tech. The current pandemic has spotlighted the need for technology within almost every marketplace. Those in retail benefit from a strong online presence, those in the service industry can help to mitigate concerns with a website that outlines their safety protocol, the list goes on. Businesses that do not already have this capability can merge with or acquire another business that has the software or ability to develop the tech that your business needs to succeed.
The term M&A is broad and encompasses a number of different transactions that meet the goals listed above. A merger, for example, essentially results in the combination of two business while an acquisition results in one purchasing a majority of ownership interest in the other. A consolidation involves two companies coming together to form a new entity. Other examples include tender offers, asset acquisition and management acquisition.
Each type of M&A is unique, and all will have tax ramifications. As such, it is wise to have an attorney who is experienced in these transactions review the documents before moving forward with negotiations. The attorneys at Goldburd McCone can aid in these negotiations while also keeping you informed of potential tax implications.