Solution sign

Combining two existing businesses is a great way to expand your market and growth potential in the relatively short time it takes to complete the merger negotiations and paperwork.  In this article, we will discuss some basic aspects of merging businesses in Pennsylvania.

Done properly, a merger can be a seamless transition from two companies to one.  There is no quid pro quo, per se.  That is, there is no buyer or seller.  Rather, there will be a surviving business.  One or both of the existing companies will disappear as the new combined business emerges.  The surviving company takes ownership of the disappearing businesses’ assets and liabilities.

Pennsylvania law (15 Pa. Cons. Stat. § 1926) requires filing articles of merger or consolidation, depending on the types of business entities involved.  If required, the articles will disclose the name of the surviving business, the name of the disappearing business or businesses, and the effective date of the merger, as well as other pertinent information. If articles of merger or consolidation are required, then the merging businesses must file a copy of the merger plan, too.

A merger plan generally discloses the plan for issuing new stock to shareholders of a disappearing business, if the disappearing business is a corporation, in exchange for their stock in the disappearing corporation.

One of the primary goals of merging businesses is minimizing potential tax consequences.  Tax issues should be explored with an experienced tax professional as a merger plan is being negotiated, since 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, including helping you find a business tax professional in your area.  Contact us today at (412)765-0546 or info@scolierilaw.com.