Bringing your business to the next level requires the combination of new skills and investments, but hiring a new team and unlocking funds for growth is not always an option.
It’s common for small or mid-sized businesses to consider a merger and acquisition (M&A) to strengthen their positions in the market. If you’re in the process of looking into M&A, then be aware that not every business will have the same strengths and strategies.
Here are 5 red flags to watch out for before a business merger.
1. They Have Debts
Merging with a business already facing financial difficulties is likely to drag your company down rather than create growth.
Financial data are available publicly, but you may want to investigate current repayment plans and ensure these are managed by professional agencies, such as the cannabis collection agency. A collection agency will be able to provide reasoning and justification for the debt recovery, also highlighting a different side to the story. For instance, a business may be facing debts as a result of the pandemic or a change of management.
2. The Office Property is Potentially Dangerous
An office property that puts employees at risk would be a terrible match. If the office contains traces of harmful materials, such as asbestos, with no regard for the safety of the team, then they don’t have their employees’ best interests at heart.
Business locations can be crucial for growth, so you want to understand the strategy behind their location choice. An office set in an area with high crime rates isn’t always a bad choice if the business is actively working to make the area safer.
3. They Have a High Turnover Rate
A company with a high turnover rate doesn’t invest in its employees.
People tend to quit when they feel unvalued, unsupported, or when they run out of professional opportunities within the business. A merger with a company that doesn’t keep a team for long could affect long-term growth and stability.
4. They Have Negative Reviews
Negative reviews can be fake or genuine, such as a disgruntled competitor or ex-employee intentionally leaving bad feedback to harm the company.
But when too many negative reviews appear on different platforms, it’s worth investigating the business. Red flags include a lack of customer service, unexpected costs, and unreliable business.
5. The Team Lacks Experts
Expertise makes a company stand out, and a business that only focuses on general skills is missing out on growth potential.
The absence of experts also means the company is likely to be an easy target for competitors, and you want career plans and professional training to be part of your company’s strategy. Failure to support the employees’ growth also affects the business.
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