Friday, October 7

5 Things To Know Before Proceeding With a Business Merger or Acquisition in Nashville, Tennessee

If you’re thinking about doing business in the Nashville, Tennessee region, there are a few things you need to know. Whether your company is considering a local merger or acquisition, the Tennessee business climate may involve certain conditions, risks, and potential pitfalls that you should prepare for before signing on the dotted line.

1. Prepare for Negotiations by Researching Several Key Factors

If you plan to do business in the Nashville, Tennessee area, you may wish to work with a Business Broker Nashville to make your merger or acquisition go more smoothly. Your broker can give you a sense of the preparation needed for negotiations. At this stage, it’s crucial to research Tennessee business law specifics. For example, in order to acquire a Nashville business and avoid penalties, you’ll need to file a pre-acquisition notice with the local commissioner.

Before coming to the negotiating table, research the following factors:

  • The type of equity or financing each company is bringing to the table
  • Comparable companies on the market and their estimated values
  • The current state of the Nashville business market
  • The current market-rate valuation of your business
  • Any assets or liabilities either company currently has
  • Your company’s current stock prices and projected financial performance
  • The number of bidders interested in potentially purchasing or merging with your company

2. Brace for a Relatively Lengthy Negotiations and Closing Period

When entering into any merger or acquisition, it’s important to realistically prepare for how long it may take. This is generally not a quick, in-and-out business deal. When factoring in due diligence, market valuations, negotiations, and the closing period, the whole process could take at least two and as long as six months total, depending on the current state of the market.

3. Both Parties Need To Perform Their Due Diligence

Performing due diligence can keep your company from financial or even reputational disaster. Before signing any contracts, you should:

  • Gather all corporate documents, records, contracts, issued patents, financial and bank statements, and other pertinent documents
  • Seek the advice of a business attorney or a financial advisor experienced in mergers and acquisitions
  • Perform an accurate valuation of the company you’re considering acquiring or merging with
  • Prepare any necessary liabilities disclosures and remain transparent throughout the process
  • Prepare vetted and detailed business contracts for both parties to agree on
  • Ensure the contracts comply with all relevant Tennessee and United States laws

4. Keep an Eye Out for Possible Red Flags Before Signing a Contract

Watch out for potential red flags that could indicate you should pull out of a contract. These warning signs could include:

  • Missing or incomplete company records
  • Excessive complaints from current or former employees
  • Poor stock market performance or financial projections
  • More liabilities than assets, in some cases

5. Prepare To Purchase and Transfer Intellectual Property as Well

Last but not least, don’t forget that if you’re purchasing or merging with a business, you’ll need to draw up a game plan for handling that company’s intellectual property, as well as its physical locations and other business assets. Intellectual property has a distinct set of federal laws to follow, so you may want to consult with an attorney before proceeding. You can start by gathering complete lists of the company’s patents, trademarks, and other pieces of intellectual property.

Nashville, Tennessee can be a positive environment for many types of businesses, but before you choose to undergo a merger or acquisition in the area, it’s important to be aware of potential pitfalls and special conditions. Fortunately, this quick guide can help clarify the process.

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