In order to run a successful company, business owners must often work with a number of firms that provide specific and useful services. Two examples of these services are business escrow and merger acquisition (M&A).
Like any other service that you are using for your business, it is imperative to utilize quality, reputable companies. For example, if you are considering using one or both services, keeping the following do’s and don’ts in mind may help the process to go as smoothly as possible.
Business Escrow Services 101
In general, business escrow services employ agents who act as a neutral third party. The escrow agents will hold titles, cash, or other valuables to help make sure everyone involved in a transaction will meet their obligations. Business escrow services are especially common when you are making a deal with another corporation or company.
To be sure you are getting the best possible business escrow services, follow these guidelines:
Do: Look for a company that hires industry experts who are familiar with and offer a wide range of escrow and related solutions.
For example, Western Alliance Bank offers a team that works hard to learn about your transaction so that they can manage it as easily and efficiently as possible. From project financing and M&A escrows to virtually any other business escrow services you need, they will turn around most transaction agreements in just one day and can also manage the flow of funds.
Don’t: Assume you will have to pay high fees.
Business escrow fees can vary widely depending on a number of factors, so it is worthwhile to do plenty of research to find a bank that requires small fees, if any. Ideally, you will want to find a service that does not charge any fees at all on cash escrow accounts; this will not only save you money, but it will also eliminate the often stressful task of determining which party will pay them.
All About Mergers & Acquisitions
As the term implies, mergers and acquisitions refers to combining two businesses into one. If you are interested in purchasing another company in order to increase your total sales and profits, or you are being approached by another business for a merger, it is vital to learn all you can about M&A services.
To help the merger be a positive experience for all involved, follow these guidelines:
Do: Look for a service that offers a digital process.
The M&A experience is a time consuming process, and meeting in person with the other owners as well as the M&A service team can be difficult to schedule. To help speed up the process, as well as cut back on the amount of trees that will be cut down to produce the paper for the documents, look for an M&A service that offers a digital option. Rather than signing pre-closing and other paperwork in person, an ideal service company will offer DocuSign as an option.
Don’t: Try to handle tax and other documents on your own.
A merger and acquisition will include a great deal of paperwork and tax documents. For instance, as the IRS notes, the corporation that has acquired another business must file Form 8806 to report this change. Rather than try to figure out the accounting on your own, work with a team of experts that will handle everything related to the copious amounts of tax reporting that is inherent to the M&A transaction. The last thing you want is to receive a letter from the IRS notifying you that your newly merged company is being audited, so look for a service that will handle tax time with ease.
The More You Know the Better it Will Go
Business escrow and M&A services are not necessarily every day services, but they are definitely important. By taking the time to vet the banks that offer these important services and acquainting yourself with the do’s and don’ts associated with them, you can rest assured you are getting the best possible service for your company.