Many business owners looking to expand will often seek out an existing business in the target area. Instead of starting from the ground up, the growing business will purchase another business outright, or as we will discuss today, propose a merger of the two businesses. In this article, we will discuss some of the factors involved in a business merger.
When businesses engage in a merger plan, there is no buyer or seller. Instead, one business will continue to operate while the other will disappear. Depending on the types of businesses involved, it may be necessary to file articles of merger or consolidation, which requires:
- Disclosure of the name of the surviving business
- The name of the disappearing business
- The effective date of the merger
- Other pertinent information
Additionally, in accordance with 15 Pa. Cons. Stat. § 1926, merging businesses are required to file a copy of the merger plan along with the articles of merger or consolidation.
The merger plan should include plans for issuing new stock to the shareholders of the disappearing business, if the business is a corporation. The surviving company takes title to all of the disappearing business’s assets and liabilities, and the disappearing corporation ceases to exist. Mergers must be carefully structured to minimize tax consequences and to ensure the parties intentions are carried out properly.
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.