Mergers

Mergers provide a way of creating a larger and more competitive business by bringing together two entities that work in partnership through shared equity ownership. If an opportunity for a merger arises, our experts can help.

What does this service provide?

If you want to create scale by merging with another organisation, here’s some of the support our mergers specialists can offer:

  • We can help you asses the relative merits of the strategy in the context of your long-term goals.
  • We will conduct a relative valuation of both businesses considering current market value and projected a future value to derive merger ratios.
  • Where future relative values are uncertain, we will advise on structures to fairly reward each merging party.
  • We will guide the merging entities through the corporate governance process which includes control mechanisms and structure to alleviate possible future tension in the partnership.
  • We offer strategic guidance around the exit strategy prior to the merger to create a common goal for the merging parties.

Important things to consider

  1. A merger differs from an acquisition as the two merging businesses grow in partnership instead of one entity controlling the other.
  2. A merger can often be advantageous as you avoid the risk of taking on acquisition debt or third-party equity. More money can then be invested in growing the business rather than servicing finance.
  3. Mergers retain the senior talent in both businesses to the benefit of the enlarged entity, however business owners used to controlling an entity unopposed will need to consider the cultural change a merger requires.
  4. If the initial relative valuations are wrong, the deal can easily fall through or result in dispute. Failure to fully bottom out valuation principals can cause tension throughout the rest of the partnership.
  5. A strong corporate governance structure is essential if, tension, disagreements and shareholder disputes are to be avoided.
  6. It is often good practice to install an independent NED or a Chairman to ensure effective and fair decision making in the new organisation.
  7. It is critical to have an exit plan in place prior to the merger to avoid future disagreements and disputes.

How much will the service cost?

Our fees are designed to ensure that we are totally aligned with your objectives. We have designed, over years of experience, a balance between commitment fees and success fees that makes sure that we are “in it together”. Our objective is for clients to always see value in our fees that significantly exceeds cost.

What should I do next?

If you would like Shaw & Co to help you merge with another business, please contact one of our corporate finance experts shown on this page, or click the arrange a meeting button.

“A merger can create opportunities for both business owners that on their own could never be achieved. But, careful planning and goal alignment is essential to ensure the merger doesn’t turn sour.”

Jim Shaw, Founder & Partner

Advantages

2+2=5

Combine the capabilities of two business, access to markets and products and services to scale your organisation faster than anything that could be achieved organically.

Expand your team

With careful planning, bringing together two or more seasoned and experienced business owners can create a powerful and formidable team to drive the combined business forwards.

Goal alignment

By merging rather than acquiring, everyone has the same shared end goal if carefully defined without the tension of cash today versus upside tomorrow.

This is for you if...

You’ve seen an opportunity to scale your business by combining services, products and capability through a merger. The opportunity is too large for you to acquire another business. You want to retain the management team in the business you intend to merge with.