Merger as an SMEs Strategy to Combat a Crisis

The merger of companies is not limited to public companies only, it is also applicable to SMEs. In fact, SMEs have abetter chance to grow and compete if they can be merged as one stronger and bigger company. With combined resources and strengths, the merged company can reduce overhead, improve efficiency and gain a bigger market share, improving both top and bottom lines.

The biggest challenge would be to merge the complementary and synergistic SMEs as one. Most of them are not professionally managed and may not even have proper accounting. Engaging a boutique investment bank or perhaps a corporate finance experienced individual to drive the process might have a higher chance of putting a few SMEs together.

In this pandemic which is not going away soon, it is important for SMEs to look at the option of merger to be a stronger company to survive through this period. The selection of merger candidates is undoubtedly important as by merging 3-4 complementary SMEs will produce a more complete and stronger company.

Once there is a stronger, bigger and more complete company, it increases the possibility of raising funds from VC or PE and an exit either through IPO or trade sales is possible.