Expanders

M&A

Mergers and acquisitions (M&A) refer to business transactions in which ownership of companies, business organizations, or their operating units are transferred to or consolidated with another company or business organization.

While “mergers” and “acquisitions” are often used interchangeably, they have different meanings. Although there is some nuance around these, we will use the following definitions to compare merger vs acquisition.

What is a Merger?

Merger:

A merger occurs when two companies combine to form a new entity. Both companies cease to exist separately and operate under a new corporate identity. Ohio businesses with under $5M in revenue typically acquire and do not commonly merge with a peer.

What is an Acquisition?

Acquisition: An acquisition happens when one company (the acquirer or buyer) purchases another company’s assets or stock (the target or seller).

  • In an M&A transaction, an asset sale is typically in which the target company sells all or substantially all its balance sheet assets, intellectual property, and contracts to the buyer. The buyer adds these assets to its own business, and then the target company typically pays off its remaining liabilities and dissolves.
  • A stock sale is a type of M&A transaction in which the shareholders in a target sell their stock to the buyer, with the target typically becoming a wholly owned subsidiary of the buyer. An acquisition can only be structured as a stock sale if the target is a stock-issuing corporation.

Many factors, including the desire for growth, market expansion, diversification, synergies, and the acquisition of unique capabilities can drive business mergers and acquisitions.

The M&A Landscape in Central Ohio

The M&A Landscape in Central Ohio

In Central Ohio, businesses with revenue between $1-5M are typically sold through listings and private transactions. Companies increasingly use acquisition strategies to scale operations, gain competitive advantages, and secure financial stability.

Practices for a Successful M&A Transaction

Many business owners focus most of their energy on valuations and buyer negotiations when considering the sale of their business. However, a critical financial aspect of taxes is often overlooked.

  • Engage Professional Advisors – M&A transactions involve complex financial, legal, and operational considerations, making professional advisors essential. M&A attorneys (not general lawyers) can navigate contractual obligations and regulatory compliance, and accountants ensure financial transparency. Engaging the right experts reduces risks and maximizes deal value.
  • Negotiate Smartly – A successful M&A transaction requires a well-structured deal that benefits both parties. Key negotiation points include purchase price, payment terms, contingencies, and earn-out agreements that align incentives between buyers and sellers. Effective communication strategies help minimize misunderstandings during negotiations and create a framework for long-term success.
  • Plan for Employee & Customer Retention – Employee and customer confidence is crucial to maintaining business continuity post-transaction. Communicating transition plans when appropriate, retaining key staff, and assuring customers about ongoing service stability help prevent disruptions. Developing an internal communication plan and offering incentives for key employees to stay can smooth the transition and protect the business’s reputation.
Challenges and Risks in M&A for Small Businesses

Challenges and Risks in M&A for Small Businesses

Successfully merging businesses requires more than financial synergy. It also requires creative deal structures, aligning company cultures and leadership styles, and addressing potential legal issues. Identifying and addressing potential conflicts early through disclosures and clear integration plans facilitates a smooth transition. Businesses that proactively align operations and culture experience higher post-merger success rates.

A well-planned business transition, including a refined integration plan, helps businesses maintain momentum and realize the full benefits of the merger or acquisition.

Navigating Mergers and Acquisitions in Central Ohio

M&A can be a game-changing strategy for business growth or exit planning, but success depends on preparation, due diligence, and execution. Understanding the local business environment, leveraging expert guidance, and planning for post-merger integration are essential to a smooth transaction. If you’re considering a sale in Central Ohio, consult with Expanders to explore your options and develop a strategy for success.

Expanders, Inc. acquires and operates privately held Central Ohio companies when their owners experience life-changing events or are ready to retire. The Expanders buy-grow-keep strategy entails investing in established businesses with significant potential for growth. This process of sustained growth compounds shareholder value over time.

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