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Should your manufacturing plant consider a merger?

though the current merger movement pales in comparison to the great merger movement of the late 1800s and early 1900s, mergers have increased by more than 50% since the early 90s.This trend in mergers and acquisitions has raised political and social concerns, especially in the realm of food production.The primary political concerns about merging companies are those of price fixing, monopolies, and antitrust violations.Because of these concerns, the United States Department of Justice has the power to block mergers.

If you are considering a merger with your manufacturing plant and another plant or company, there are several things to consider.One thing to think about is whether your company is merging with a company that has a higher or lower price to earnings ratio.If you are going to reduce your price to earnings ratio through a merger, you need to consider the perspective of your stockholders.Is reducing your overall earnings per share of stock worth the benefits of a merger?

Another thing to consider when you are considering a merger is what kind of merger you are going to make.If you are combining two plants that manufacture the same things, you might not come out ahead in the long run.In that case, it may be a better idea for you to increase productivity at your current plant.If you are going to have two plants, it might be better if they focused on different aspects of manufacturing the same product or even manufacturing a different product all together.

One of the big advantages of mergers is resource surplus.When two different, fully functioning companies come together, there has to be some surplus.You may be able to combine some departments and surplus the people that overlap between the two departments.You also might be able to surplus some of the equipment.If you utilize heavy equipment in your manufacturing operation, you might find that you only need one rock-crusher between the two companies.When drawing up the plans for a merger, you should explicitly state surplus in each area of the combined companies.Surplus can be viewed as profit in a merger.

Another thing to consider when you are thinking about a merger is what the merger is going to do to you competitively.If you don't merge with the other plant, it is quite likely that someone else will.If you merge with the competition, you eliminate the competition.On the other hand, if your competition merges with the competition, you might not be able to compete with their combined forces.

Decide whether you are ready for the kind of growth that a merger will bring.If you are ready to expand, a merger might be the best investment, allowing you to expand without a lot of overhead costs.However, the management details need to be carefully drawn up.Two owners coming together to form a partnership is not always a relationship made in heaven.Decide before merging who will be in charge of what.If you feel like the working relationship and the shared responsibilities will be a strain on you and on your happiness, you might not be ready to merge.

If you feel like you will not be able to stand alone it is better to enter into a merger with another company that to be "acquired" by the other company.If you are struggling to survive and an opportunity comes to merge with another company you should probably jump at the chance.On the other hand, if you are a strong company and you are thinking of merging.You might want to wait and acquire the other company when it starts to fold.

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