This recent wave of mergers and acquisitions has prompted businesses to get scale fast and place themselves in a position to reap considerable benefits from “first mover advantages.” Speed to market is a critical competitive differentiation in all businesses, regardless of their size and industry classification. Going it alone can slow you down and very often it turns out to be one sure way to get left behind. This article is the first in a series of resources that offer a working guide to help you effectively chart your way, from initial discussions to integrating the operations, through the many different steps involved in successful business combinations. Specifically you will learn:

* What to look for

* Things that could go wrong

* What to do

* How to do it successfully

Different companies will have various motives when deciding to pursue an acquisition, divestiture, joint venture, or strategic alliance plan. The decision is usually driven by key business fundamentals such as broader competitive product line, access to strong distribution channels or new markets, sharing of scarce talent, lower unit cost position via the elimination of common costs, economies of scale, better market positioning with a stronger brand recognition, and faster speed of entering a market versus doing a start-up. In the case of divestiture, the motivation to sell may be due to poor financial performance of the company or, if the business is a subsidiary or division, it no longer fits strategically with the future direction of the company.

Having decided that the company must participate in mergers, acquisitions, divestitures, joint ventures, or other strategic alliances to achieve short and long-term goals, it must then ensure that all transactions fit within the corporate strategic plan. Too often in the past companies who use business combinations to stray too far away from their core business strategy have a tendency to fail in their effort to execute on the promise of the deal. If the company has a clear sense of where it wants to go and the missing elements of its strategy that is needed to win, then finding companies who bring these missing strengths to bear on serving the market is an essential ingredient for success.

A merger occurs when one company is legally absorbed into another and the surviving company takes over all of the assets and liabilities of the absorbed company. There cannot be any separate transfer of assets or liabilities to other third parties and a certificate of merger must be filed in the state where the new business will incorporate. The absorbed company shareholders are not “bought out” and therefore the merger is, in essence, treated as a stock transaction for federal tax purposes. The shareholders of both of the merged companies exchange their original stock for new stock in the surviving company. The company’s board of directors and shareholders must approve the merger.

* Acquisitions can occur in two ways:

* Buy the assets of the company

* Buy the company’s shares from the stockholders

Under the acquisition scenario, the shareholders of the company being bought can, in most instances, take their money and “ride off into the sunset.” The terms of the payment can be either in cash or stock of the purchase (which is as good as cash for publicly traded companies). The acquisition is different from a merger in that the selling shareholders do not own stock in a new, combined enterprise. The buyer can select targeted assets or liabilities to take and others to discard which the seller must accommodate. For example, the buyer does not have to assume the debt of the company being bought–although in most cases they do.

In today’s fast changing markets, more and more companies across multiple industries are concluding that it is reasonable to join with other companies to enter and grow new markets. Alliances can take place between two competitors, a company and its vendors, or even two companies operating in different market spaces. Sometimes an alliance allows a firm to expand without actually taking on more employees–an important phenomenon for small businesses. The opportunity to handle additional growth without major hiring can have a positive impact on profitability and cash flow. These alliances can be structured as partnerships or be set up as new corporations. The structure is determined by the goals and objectives of the parties as well as tax advantages and liability concerns.

JVMergerHelper is one of the best places on the Internet to find guides, tools, and templates to help you with sample letters and agreements, tips, guidelines, rules of thumb, real world examples, step-by-step instructions, presentations. Use them to quickly grasp the key essentials needed to win. This particular resource addresses the elements of a business combination or joint venture transaction by targeting the tools and templates into seven parts:

* Finding the Right Target Company

* Structuring the Transaction

* Preparing Solid Transaction Documents

* Valuing the Business

* Doing Effective Due Diligence

* Negotiating and Closing the Deal

* Combining the Businesses

* Presenting the Deal Effectively

Business combinations are not easy to execute and they most often don’t live up to their expectations. There have been several studies done on business combinations announced in the last 20 years and in well over 60% of the cases the synergy was not realized. When synergy doesn’t materialize the acquiring company ends up damaging shareholder value because premiums paid to take a significant equity stake in a target company are not recouped. However, by understanding a company’s motives for doing business combinations, how the decision fits in with their overall corporate strategy, and the careful identification of the characteristics of an ideal target, the chances of success can be greatly increased. In addition, using proven successful tools and templates goes a far way in helping to make sure your company is one of those in the winners circle.