When is a merger or acquisition right for your business?

There were 5,355 mergers and acquisitions (in Dutch) in 2024 in the Netherlands, according to Netherlands Statistics (CBS). In 2023, there were 4,775. These figures show that Dutch businesses regularly choose a merger or takeover as a strategic move.

What is a merger?

In a merger, 2 or more businesses form 1 new company together. This is done both legally through a civil-law notary, and practically in terms of production, staff, and customers. In a merger, the businesses are often equal. They share their money, people, and knowledge to become stronger in the market.

What is a business takeover?

In a business takeover, known as an acquisition, one business takes full control of the other. So, the difference between a merger and an acquisition is in the right to make decisions.

Reasons for a merger or acquisition

There are several reasons for a business merger or acquisition. Basically, it is always a strategic move because you want to strengthen your business in one or more areas. For example, because they:

• Struggle with stability or growth. For example, if your business is struggling to survive independently.
• Want to strengthen or expand your offer or sales market. For example, through access to new customers, regions, or products.
• Are stronger together than alone. Working together can ensure a lower cost price or a better market position.
• Lack essential resources. Such as money, equipment, or premises.
• Lack specific expertise. For example, about a particular production task or a new target group.
• Lack personnel. With more or specialised staff, you can ensure extra production.
• Want to shift focus. Merging with another party can provide scope for less operational and more strategic work.

Choosing between a merger and an acquisition

Businesses choose to cooperate depending on how strong their business is and what their goals are. The company that has the most to offer, for example, more buildings, personnel, or expertise, is often the strongest in the negotiation. Also important is what both parties want. For example, if the strongest party only wants full control and so wants an acquisition, not a merger.

Isabel Boerdam founded Green Food Lab in 2018 and recently investigated different possibilities. These included a merger with 3 other agencies and a full takeover by Schuttelaar & Partners. By doing this, she discovered which form best suited her needs.

Issues to consider

A merger or acquisition is a major step that cannot be taken lightly. So it is important to carefully consider a number of issues in advance.

1. The right business

A successful collaboration starts with the right partner. Choose a business that not only has a strong name or reputation, but also adds expertise or access to a new market. Equally important is that you share the same mission and vision, so that there is a solid basis for the long term.

For Boerdam, it was important that the partner also embraced sustainability as a core value. "At Schuttelaar & Partners, sustainability is woven into their entire business,” she says. “At the other businesses I spoke to, it was important, but more as an afterthought or because of the trend. As a result, the click with Schuttelaars & Partners was the strongest. And in the end, it's all about working together. You have to really want that."

Boerman says you should always speak to several parties so you can compare options. "Only when you have things to compare can you assess what your opinion is. And how much value you attach to the individual aspects, such as the form of cooperation, personal click, or a shared mission."

2. Set out clear agreements

To avoid misunderstandings and conflicts, it is essential to make clear agreements in advance on how you will divide responsibilities, powers, and risks. Also consider the ownership structure. How will the shares be divided, and who has control over which parts of the business?

Boerdam sold her business to Schuttelaar & Partners for an agreed price and is now an equal shareholder. "With other parties, I also discussed other options, such as me taking up employment with the company or getting fewer shares. But I wanted to remain an entrepreneur, so Schuttelaar & Partners' proposal suited me in that way too. We both discussed our wishes and made a proposal based on profit standardisation. Then it's a matter of coming to a good agreement with each other. You want both parties to feel good about working together. So we both made some compromises and came to an agreement."

3. Agree on personnel

A merger or takeover has consequences for staff. Discuss how to deal with existing employment contracts, differences in employment conditions, and the division or merger of departments. Ensure clear communication so employees know where they stand and continue to feel involved in the new organisation.

For Boerdam, it was a requirement that her staff could go along with the acquisition. "Although of course there will be changes in their function and work. My business had 10 employees and now we have a total of 120 people. Some employees have a little less control, but my role as an entrepreneur is to look at the big picture. Unfortunately, you cannot always take everyone into account. Although we are doing everything we can to make the employees feel at home in the new situation. We have kept our old office in Amsterdam, for example."