Last month we discussed questions to consider regarding character and philosophy before entering into a joint venture or merger. After you have a foundational understanding of what is important to your future business partner philosophically, it’s time to begin asking how your products and services will integrate.
Smooth integration of product is crucial to the well-being of your company, the dedication of your employees, and the loyalty of your customers. In order for a smooth transition to take place, it is important to make sure you’re asking the right questions.
- How will new product development align?
Assess the capabilities of both companies. Will existing infrastructure be sufficient for new products or product changes? How do product line strategies compare? What will this look like to the consumer?
- Does their quality meet your company’s standards?
When joining forces with another company, it is important that your existing products or services aren’t compromised. It will be more important now than ever that your customers are able to measure a reason to stay with your company. How consistent and reliable are the prospect’s products? What procedures are in place to ensure consistency? Do they comply with industry regulations?
- Are there any intellectual property matters to discuss?
You are likely working with the prospective company because one or more of their products and/or services provide value to your company. Make sure those assets can’t be stolen by competitors in the market. Has your future business partner taken the appropriate steps to protect his company’s intellectual property? What are the existing patents, trademarks, or copyrights in place? Do any trade secrets need to be upheld?
- How will the joint venture, merger, or acquisition be framed to the customer?
The businesses and its employees are not the only ones affected during a business combination. Customers of both businesses will want to know how the upcoming changes will impact them. Make sure you and your future partner are thinking through any potential questions that may arise: Will they have the same contact person? Will there be any product or warranty changes? Will there be a shift in prices?
- How will your respective material contracts fit together?
When working towards a JV or merger with another company, it is important that each has a good understanding of the other’s obligations and contracts. Though it may be time consuming, it is imperative to have a good understanding of items such as: employment agreements, loans and credit, settlement agreements, license agreements, non-compete agreements, etc.
The product you deliver and your reputation in the market are a critical component to your merging companies’ success during this transition. Make sure you and your future business partners have a solid game plan in place by asking each other these questions. Next month, we will look at considerations that should be made regarding your people and assets.
ABOUT THE AUTHOR – STUART GUTWEIN
Stuart Gutwein is co-founder and attorney at Gutwein Law. His career encompasses over a decade of experience in several areas of business including mergers and acquisitions, business formation, and product development. He currently serves on the Indiana Business Law Survey Commission, serves as a board member of M25 Group and is an active member of the Ag Law Council of the Indiana State Bar Association.
