Merging Businesses
As your business grows and matures, you may consider joining forces with your competition in a business deal known as a merger, or buying out the competition altogether by completing an acquisition. In this article, we will discuss some of the factors involved in a business merger.
In a merger, there is no buyer or seller. Rather, there will be a surviving business and a disappearing business. Depending on the types of business entities involved, you may need to file articles of merger or consolidation, which requires disclosure of the name of the surviving business, the name of the disappearing business, and the effective date of the merger, along with other pertinent information. In addition, pursuant to 15 Pa. Cons. Stat. § 1926, merging businesses must file a copy of the merger plan with the articles of merger or consolidation.
A merger plan should include plans for issuing new stock to shareholders of the disappearing business, if the business is a corporation, in exchange for their stock in the disappearing corporation. The surviving company will take title to all of the disappearing business’s assets and liabilities, and the disappearing corporation will cease to exist.
Mergers can result in significant tax consequences, which should be considered at the outset of forming a merger plan. Proper structuring and implementation of a merger plan can help neutralize or defer potential tax consequences.
If you are considering a merger or acquisition, consult with an experienced Pennsylvania business law attorney who can help you choose the right course action for you and your business. Located in western Pennsylvania, the experienced attorneys at Scolieri-Beam Law Group, P.C. can answer these and other business law questions. Contact us today at (412)765-0546 or info@scolierilaw.com.