September 2015


Is a Merger Right for your Business?

One of the most complicated small business decisions you may have to make is whether to merge your business with another. A merger requires a great deal of thought about the complexities involved.

There is no real one-size-fits-all formula. The most successful mergers start when companies look to increase market share and strengthen resources—not to save a struggling enterprise—so it’s beneficial to look at a potential merger as an improvement rather than a saving grace.

Advantages of Merging

Merging with another company brings along its customer base, which can increase your business. Merging is a way to encourage growth, you can look at it as a way to open up new channels and new markets.

For example, if you’re a technology company looking to reach out to a consumer market, it would be smart to merge with a software company because your services complement each other, and you would automatically have direct access to a new market and already established customer base.

Merging can be a great business venture for strengthening a part of your company that is weak, but don’t count on a merger to save two failing companies. If both companies are broke, chances are they won’t make it together.

How to merge smoothly

Although merging your business with another can be a good opportunity to grow, that doesn’t mean it will be easy. A merge integrates culture, technology and people. Making it work after the fact is where the real skill is.

Here are some tips for facilitating the merge:

Focus on core values

It’s important to make sure your values are aligned before joining. One business might be philanthropic and one might be mercenary, but they must have the same core values when merging in order to achieve the same goals.

Keep lines of communication open

When it comes to employees, treat the merge almost like a marriage. You’re bringing together different backgrounds and histories, so there has to be constant communication to make sure everyone’s voice is being heard and no one feels slighted. Put all goals, boundaries and expectations in writing to guarantee everyone is on the same page.

Keep job roles as consistent as possible

Role changes need to really stay as closely related as possible to what employees were doing before the merger unless an opportunity opens in an area where an employee has the opportunity to do something they are really passionate about. You want people to excel with a merger and a completely new role could set up for that employee’s failure.

Encourage team cohesiveness

A merger is going to be successful based on how you treat the employees. To help the new team work well together, have a social event or a team-building session in the early stages of the merge. It will allow everyone to get to know each other better, which makes for better teamwork.

When preparing for a merge, insuring the right people are there to guide you is critical. Finding the right bankers, and the right people is something I always advise to my clients. Do your homework, take your time and make sure your lawyers and business advisors are with you every step of the way.

Michael Wagman received his Chartered Accountant designation in 1995, and has spent his entire professional career at Lipton, where he became a Partner in 2002.   Michael’s extensive experience includes a wide variety of professionals in the medical, dental, psychology, legal and real estate sectors.   Michael has decades of  experience servicing professionals and has a substantial knowledge of the rules and regulations governing specific organizations, such as the Ontario and Canadian Psychological Associations,   The College of Physicians and Surgeons of Ontario, The Royal College of Surgeons of Ontario, Ontario Society of Professional Engineers and The Law Society of Upper Canada.




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Changes to the Employer Health Tax Exemption

Effective January 1, 2014, the amount of annual Ontario payroll that may be exempt from Employer Health Tax (EHT) is increased from $400,000 to $450,000. This exemption is eliminated for private-sector employers with annual Ontario payrolls over $5 million. Registered charities, including those with payrolls over $5 million, continue to be eligible for the exemption.

Eligible employers are exempt from EHT on the first $450,000 of total Ontario remuneration each year. This exemption will be adjusted for inflation every five years using the Ontario Consumer Price Index. Employers with annual Ontario payroll over $5 million cannot claim the exemption.

Only one annual exemption is available for an associated group of employers. Employers that are associated at any time during the year must take into account the total Ontario remuneration of each associated entity in determining whether they can claim the exemption. When the combined total Ontario remuneration of all the employers that are associated exceeds $5 million, these employers are not eligible for the exemption.

This publication has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. The publication cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon the information contained therein without obtaining specific professional advice. Please contact Lipton LLP to discuss these matters in the context of your particular circumstances. Lipton LLP, its partners, employees and agents do not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this publication or for any decision based on it.
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