There are many reasons why two companies may decide to join forces througha merger process, no longer being rivals to go on to compete together. It’s a way to be stronger and be able to deal with competition more effectively.

The merger of companies is a very common process, but that is unknown to the general public, so at AYCE Laborytax we will tell you how a merger of companies is made.

What is a business merger?

A business merger consists of the union of at least two legal entities,who decide to combine their assets and form a single company, with the aim of being stronger and promoting growth at the business level. When the merger is carried out, all the properties of the undertakings will be encompassed in the same company, which will become a single administrative body.

In most cases, a merger of companies continues to perform the same business activity, buton a higher scale. But there are also many cases of merger between two companies from different sectors, with the aim of covering a larger market strip and reaching more audiences.

How do you merge companies?

Once we know what a merger of companies is and what types of mergers exist, let’s focus on how a merger of companies is made.

Requirements for a merger of companies:

  • A minimum of two companies must participate for a merger of companies.
  • When the merger is carried out, the assets of the merged companies are transmitted in full to a single company.
  • The partners of the merged companies will join the new company created, maintaining the value of their holdings.

Steps to do a merger of companies

  • Economic and financial study:

The first step is to do an economic and financial study to see if the business merger is viable and will be beneficial for merged companies. To carry out this study, it is necessary to take into account different factors, such as the value of the companies that will participate in the merger,as well as the securities that will be distributed by each company’s contributions, as well as the value that the final company will have,once the merger is made.

  • Melting balance:

After the previous study, a merger balance sheet will have to be submitted,which must be carried out by the partners of the companies to be merged. The objective of the merger balance sheet is that the partners of the companies that will participate in the merger can know the type of exchange of their shares in the new company, and for this purpose it will establish the value of the company’s assets.

  • Joint fusion project:

The next step will be to develop a joint merger project by the administrators of the merged companies. This project should include the name to be obtained by the company, as well as the registered office, the types of redemption, the new statutes, the valuation of the assets to be transmitted, the date on which the merger will take place, the consequences on employment, the effects on social responsibility and the gender impact on the administrative bodies.

  • Report by administrators:

Administrators should also make a report explaining the merger in detail. This report should set out in general the economic and legal characteristics of the merger, as well as other factors such as the type of exchange of shares, as well as the possible consequences of the merger on workers, partners and creditors.

  • Seen by an independent expert:

In addition to the administrators’ report, it will be necessary for an independent expert appointed by the commercial registrar to give the go-ahead to the merger.

  • Agreement on the partner board:

In order to carry it out, the merger must be approved at the partnerboard, otherwise it cannot be carried out. It is essential that all companies that will participate in the merger process are given their approval on the partner board.

  • Formalization:

Finally, only the formalization of the merger of companies remains. To do this, the merger agreement must be submitted to the notary and the merger entered into the Commercial Register.

If you are considering the possibility of merging with another company and want to have professional advice, at AYCE Laborytax we have a large team of experts in mergers of companies, at your disposal to help you in risk management, improve the performance of operations and increase the opportunities of your transactions. Contact us without obligation, we can and want to help you make your business merger a success.

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