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Merger Questions

Mergers occur when two unite to create one company. This is generally done in an attempt to improve both companies overall profit margin while combining the operating cost.

Most mergers take place without any notification to the general public or the employees of the two companies involved. The reason for the secrecy is the fact that most mergers fail before they have a chance for a trial run. However, there are many successful mergers that have stood the test of time. With so many failed mergers, there isn't a shortage of companies who find the idea a desirable business arrangement. Below are just a few of the more commonly asked merger questions below have been answered by experts

When a company takes part in a internal company merger. During the transfer of 401k accounts from Mass Mutual to Fidelity a pending Default status appeared on the loans. What should be done?

The responsibility falls on your employer to ensure the payments are sent to Mass Mutual or the employer will have to take steps to transfer the loans to Fidelity. If your employer is withholding payments and are not fixing the issue, you may have enough cause to file a lawsuit against your employer if you suffer losses because of the delay in loan transfers. Losses would also include negative impacts on your credit report. To get things started, you can start will a letter to Mass Mutual and a duplicate letter should go to your plan administrator. In the letter you need to explain that your employer has been withholding money and they need to correct the problem or you will look into filing a law suit. If the demand letter doesn't bring about changes, you may have to consider a law suit.

I am a board member of a small bank in Virginia that is being merged with a banker group. We were not provided with the opportunity to cash out with a premium. We have no say in the changes that are being made. Can anything be done?

When two companies merge, it is normal practice that changes will be made. However, if you feel like the employers are not following proper company procedures, you need to contact the State Department of banking. The department will conduct an internal investigation to review the merger transition and liquidation notices are being handled appropriately. If the employer is operating outside of banking procedures, you have a responsibility to notify the proper officials and provide them with a list detailing the actions of the employer.

When 2 companies are going through a merger, and 2 sales forces are combined; one of which has a much higher salary package, is the new company required by law to equalize the salaries?

The details of the merger will decide how wages are set or adjusted. There isn't a need to equalize the employee pay if both companies continue to operate as separate entities. While both companies have merged as one, they still work as individual extensions of the parent company. However, if the two companies merge as one operation with a combined staff, the employee salaries would have to be adjusted according to the equal pay statutes.

Should companies merge to benefit the overall profit of both companies? What type of merger would be best (i.e., A type, etc.)?

In order for a merger to benefit both companies, there needs to be a common denominator that allows for business expenses to be consolidated. If the costs cannot be consolidated, the merger wouldn't be a profitable move. When two companies merge without the mutual benefit as an intertwined company who can share expenses, you are left with two companies who have merged yet operate as separate units.

As for which type of merger would best suit your needs, here is a short description of each one:

Horizontal Merger: When two companies of equal operating levels merge together to create the same business but on a greater scale.

Vertical Merger: When two companies from different operations of commerce merge. A typical example would be a distributor and a retailer.

Conglomeration: When two businesses merge but have nothing in common.

Market-extension Merger: two companies merge that market the same product or service but each business caters to a different market.

Product-extension Merger: When two companies who conduct business in the same market but offer different products merge.

Mergers are a common practice with businesses who want to improve their current operation. Many small companies merge in an attempt to consolidate overall expenses and increase profits. While merging seems to offer many benefits, a person should do their research before attempting such a move. If you are interested in learning more about mergers and how they work, you should ask an Expert to explain the benefits and risks of merging two companies.
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