Merger and acquisition consulting services in Burlington, Oakville, Hamilton, and surrounding areas

Successful mergers and acquisitions are the result of a number of things including proper planning, due diligence, complimentary cultures amongst companies, and favourable market conditions etc.

Each type of merger serves different strategic goals and can offer unique advantages based on the companies’ objectives and the industries in which they operate. 

The four types of mergers and acquisitions are: 

Horizontal Mergers:  

These involve the combination of companies operating in the same industry and at the same stage of the production process. The aim is often to increase market share, reduce competition, and achieve economies of scale. 

Vertical Mergers:  

In vertical mergers, companies from different stages of the supply chain come together. This can include a supplier merging with a manufacturer or a distributor merging with a retailer. The goal is to streamline operations, reduce costs, and improve efficiency. 

Conglomerate Mergers:  

Conglomerate mergers involve companies that are unrelated in terms of industry and business operations. The goal is to diversify risk and create synergies between different business lines. 

Market Extension Mergers:  

Also known as concentric mergers, these involve companies operating in the same industry but in different geographical markets. This allows the merged entity to expand its customer base and distribution reach. 

Proper planning and an implementation strategy will help smooth transitions. Though challenges will be sure to present themselves. Some challenges of mergers and acquisitions to look out for are:

• Employee buy-in;
• Proper introductions, transitions and transfers among suppliers, vendors and customer relationships to new owners/management
• Failure to spend sufficient time required to integrate due to solely focusing on the core existing operations of the target companies, an acquisition is often distracting as it is not a core competence of the buyer or seller.

Typically, a merger or acquisition can take between 6-9 months from the initial discussions until the transaction is closed. Each transaction is unique with some transactions being completed on a shorter timeline while other more complex transactions can extend past 9 months in length.

In mergers and acquisitions:

• One company acquires another, leading to a change in ownership and control or merged companies fully integrate their operations, processes, and resources.
• A merger or acquisition often results in the target company becoming part of the acquiring company’s legal entity.
• Mergers and acquisitions aim for synergy, cost savings, market dominance, and expansion. This may involve dissolution of the acquired company as a separate entity.

Whereas joint ventures:

• Joint ventures involve two or more companies collaborating while retaining their separate identities and ownership.
• Companies maintain autonomy in their operations and management.
• The joint venture can be standalone legal entities or contractual agreements without a separate legal entity.
• This can be formed for specific projects or ventures to share expertise, risks, and resources.
• Companies can share risks, costs, and rewards based on their agreed-upon terms.

You will generate taxable income on the sale of your business.

The tax impact and related implications will vary, depending on several circumstances, including whether you are selling shares or assets and who is selling the business (i.e. corporation or individual). It’s important to talk to an expert on how to mitigate the implications throughout the process.

Some of the items you need to consider are:

• The lifetime capital gains exemptions and whether your business qualifies
• The difference between selling shares versus assets and what the pros and cons are of each approach.

The amount of due diligence that is required when buying a business varies depending on the situation, we recommend speaking to one of our experts so that you can understand what is specifically required in your individual circumstances. Some factors include whether you are buying the assets or shares of a business, the level of knowledge of the industry and the familiarity of the business itself.