Business owners have a few options when it comes to exiting or expanding, and many find themselves buying another enterprise or selling to another party at some point. The process of a merger or acquisition in Colorado can raise any number of legal issues. According to members of the Forbes Business Development Council, the most important things to consider include asking the tough questions, knowing the deal breakers, gathering information and checking the culture fit.
Residents of Colorado who have a privately owned business have a number of options for making their business public, including conducting a reverse merger. Business owners may consider using a reverse merger over a traditional initial public offering, which requires an investment bank to underwrite and issue shares of the business, because the process of a reverse merger is shorter, less complicated and less costly.
A reverse merger may be a good idea for some Colorado companies that want to enter the public arena. This shorter and less expensive approach to going public is a popular alternative to the initial public offering approach. In the process, a company can hire an investment banking firm to oversee the underwriting process. The firm issues the shares for the company.
Like all big things that require intense preparation, selling a business can be a messy affair filled with intricate details. The process can also be quite emotional, especially for an entrepreneur who started a company from the ground up. Therefore, any business owner in Colorado planning to sell the fruits of their hard labor should take several factors into consideration.
When there are two Colorado businesses being merged, separate IT entities have to be combined. From infrastructure to how resources are being utilized, all functions between the two entities must be properly aligned. The integration process should be approached with caution when dealing with reverse mergers or any transaction involving the sale of a business.
When a credit union or other financial services company in Colorado or elsewhere merges with another entity, it may expose itself to any risks posed by that enterprise. It may be a good idea to have a cybersecurity professional analyze any risks that another business may pose if it is acquired. Such a review should focus on potential problems related to people and processes just as much as it does on issues related strictly to IT.
A study by EY found that high corporate tax rates may slow the rate of mergers and acquisitions in the United States. This may make it harder for business owners in Colorado to exit their companies or grow them over time. The study also found that taxation of international business income may give foreign companies an advantage when it comes to bidding for companies around the world.
It is natural for Colorado residents to attempt to maximize returns during strong markets and protect against losses in weak markets. However, many small business owners don't take this approach when it comes to their companies. While they may work hard to grow their companies, they might not seek help and guidance to maximizing values.
For owners looking to sell a Denver business, contracting with a broker could result in a higher price and better terms. Absent unsolicited offers, owners put a lot at stake when they pursue an exit. Word of mouth and other advertising efforts could result in loss of key employees, damage to supplier relationships and a resulting loss in value. The right owner may not even be found in the local market. A business broker can help by matching sellers with motivated buyers.
Investors in Colorado and elsewhere in the country are getting fewer chances to put their money into innovative startup businesses as more and more of them are eschewing initial public offerings and instead choosing to be acquired by larger companies. Fewer IPOs were available to investors on American exchanges in 2016 than during any year since the financial crisis, but the number of mergers soared to levels not witnessed in almost a decade.