Where Business And Law Come Together

2 types of reorganization often required following a merger

On Behalf of | Jun 26, 2023 | Business Law

Turning two separate businesses into one cohesive organization can be quite a challenge for the executives and management teams involved. Following a merger, there will generally be major shifts in the resulting company. Companies must act quickly to ensure the success of a merger.

Businesses often need to reorganize during or after a merger with another company, and that process may mean that the resulting business is substantially different than either of the businesses that combined to make the new organization. There are many changes that may need to take place to successfully combine two businesses into a single, profitable organization. The two shifts below are often among the most important steps a business will need to take to improve financial solvency after a merger.

Evaluating assets and combining facilities

Sometimes, business mergers result in a company maintaining all of the facilities operated by the independent companies, but many times, they will combine the two organizations into one central location. This may mean getting rid of all of the commercial real estate previously rented or owned by the businesses to acquire a newer, bigger space.

Other times, businesses from one company’s facilities into the others. Reviewing the actual spaces is only the first step. It will be very important to have a detailed inventory of the assets at every property and to evaluate the usefulness of each space before making final determinations about leases or the sale of certain properties. Companies may need to liquidate equipment or arrange for the transportation of certain machinery from one facility to another.

Reviewing staffing and potentially downsizing

After two companies combine facilities, they may no longer need two separate maintenance crews. Sales teams, human resources departments and even the executive suite may all have redundant positions now that the two companies have combined. It may be necessary to eliminate some positions and either transfer workers to different roles within the company or conduct layoffs and terminations as necessary to streamline the staffing for the merged final organization. This process should also involve retention efforts to avoid the loss of certain key members of different teams during the transition.

Being proactive about assessing the major changes and reductions that are usually necessary after a merger can help businesses prepare for a successful transaction. Seeking legal guidance can be truly helpful as well.