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What is a business merger and how is it achieved?

A business merger occurs when two or more business entities become one. This process can occur in a number of ways. For example, one business could buy another and absorb the purchased corporation into its existing operating procedures. Alternatively, two or more organizations could combine into a new entity that creates its own identity apart from those of the original businesses. Mergers involve bringing different organizations together under a common heading.

The Department of Treasury for New Jersey provides a checklist for business mergers throughout the state. Different processes exist depending upon whether the involved businesses are for profit, nonprofit or organized as LPs, LLCs, LLPs or PCs. All of the different processes require individuals filing merger paperwork to follow the specific requirements of the state's instructions.

Ensuring that a merger happens smoothly requires detailed work and a high level of due diligence exercised on the parts of all involved parties. Companies must pay specific fees to the state to move their mergers forward. They must also pull together in the filing paperwork particular items that demonstrate the names of the involved businesses, the date the merger is adopted, the legal basis under which the merger is permissible and other relevant business data.

New companies must accept that they can be sued by various entities though a noted attestation clause. Additionally, director-level managers of all involved companies must sign off on the paperwork before it is submitted. Several other steps are also involved in simply preparing the merger paperwork and readers should note that the steps discussed in this note are not comprehensive to all requirements.

Buying a company and taking it into the fold of an existing organization can be a difficult process to achieve. Details can be missed that can be fatal to the successful merger of two or more companies. Attorneys who practice business law in New Jersey can help point their clients in the right directions to successfully accomplish business mergers.

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