Be it cash or knowledge, there are times when something is missing. You might have hit a wall and you need some help from a like-minded startup. In turn, you have something to share with them that will improve their bottom line. One possibility is to look for an angel investor who likes the idea of two startups for the price of one. He might see future success in one area of your business and see it in another area of your partner’s.
Getting repeat customers who will stay faithful to you is one of the most difficult aspects of any business but especially a startup. Merging clients can double the chances of you and/or your new partner building your client base with customers who will help make your company a success. A percentage will drop off and many will only come to you once or twice. But the more potential clients on your list the better the odds. The search for new clients is always on.
Pros and Cons of Any Merger
Talk to the other partners, the employees. Find out what they like and what is lacking in what you have now. Ask them the same questions about how things would improve or not if a merger were to happen. Sole proprietorship, talk to yourself and make a list of pros and cons. Do all the employees stay? Which location do you keep? Or do you keep all of them and expand more that way? How will management change? Who runs the show now? Can there be two CEOs?
So Is It Worth It?
It might look like compromise. It might look like giving up your power. The other side is going through the same thing. One of best-selling points for merging with another startup would be the financial considerations. Neither of you is independently wealthy yet. You’ve both got some good ideas and are roughly on the same path with similar goals. There were 14,936 corporate mergers in the US in 2018, so it’s a fairly common practice.
If you decide to merge and it doesn’t work out, there are always options for growing your startup business. Down the road, one of you might still buy the other out once you have grown in size and customer base. The best-case scenario is that, whether there is a merger or not, it will work well for both parties.
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