{"id":1182,"date":"2018-08-18T02:54:51","date_gmt":"2018-08-18T02:54:51","guid":{"rendered":"http:\/\/www.realworldconsulting.kiwi\/rwc\/?p=1182"},"modified":"2018-08-18T08:38:38","modified_gmt":"2018-08-18T08:38:38","slug":"i-want-to-increase-my-scale-of-operation-but-i-dont-want-to-merge-with-another-company-what-other-options-are-there","status":"publish","type":"post","link":"https:\/\/www.realworldconsulting.kiwi\/rwc\/rwc-blog\/i-want-to-increase-my-scale-of-operation-but-i-dont-want-to-merge-with-another-company-what-other-options-are-there\/","title":{"rendered":"I Want to Increase My Scale of Operation – But I Don’t Want to Merge With Another Company. What Other Options Are There ?"},"content":{"rendered":"

For those Small Medium Enterprises that are wanting to re-structure themselves in order to increase their scale of operation, there are options available to you that don’t involve merging. Here are a few alternatives:<\/span><\/p>\n

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  1. Add one or more additional shareholder. Often this is done in order to increase venture and\/ or working capital, or to introduce a range of skills\/ expertise that isn’t otherwise available among existing personnel.<\/span><\/li>\n
  2. Crowd funding to raise venture capital for expansion and\/ or new product\/ service development.<\/span><\/li>\n
  3. Form a “parent company” which is collectively owned by shareholders who are logically related due to the market sphere\/\u00a0 \u00a0 \u00a0 sector that they operate in. For example, a web site design company could combine with a graphics design company and an electronic payment gateway company under one brand – that being the brand of the parent company.<\/span><\/li>\n<\/ol>\n

    Parent companies are a particularly effective way of combining strengths and expertise of shareholders. Each joining company retains its own company status as (for example) a Limited Liability Company, but then also<\/strong> becomes a shareholder in the parent company.\u00a0<\/span><\/p>\n

    The beauty of well-aligned SME’s working together under a parent company structure is that, from the customer perspective dealing with the one (single) parent company and receiving a single invoice for work performed is a lot simpler than dealing with say 3 different companies and therefore receiving multiple invoices for work performed.<\/span><\/p>\n

    For example, a customer wanting an e-commerce website designed and built by the parent company referred to in the example above, would be able to go to the one parent company (let’s assign the trading identity “One Stop Digital Shop” to this entity) to have their website developed, because the website design capability, graphics creator and electronic payment gateway expertise are all under the same banner. They will each contribute their expertise towards the production of the client’s desired website, and as a result a single invoice only will be produced – reflecting the brand of the parent company.<\/span><\/p>\n

    Parent company structures work well for operators that offer the same (or similar) product categories – such as a Franchise. For example, a parent company based in Canada which focuses on retailing jewellery in Austria, Denmark, China and New Zealand. Each operation in each country has a network of retail outlets. All of the retail outlets across all of the countries concerned operate under the same common business brand, so the B2C customer experience in all countries is only in relation to this one brand.The network of retailers in each country is in the first instance affiliated with the company Head Office in the given country, and in turn the retailer network per country is a subsidiary of the Canadian based global Head Office\/ company. Often international companies will structure themselves in this way to enable easy “culling” of under-performing individual subsidiaries, and for cost centre accounting purposes. End of year financial performances across all subsidiaries are typically then combined in the preparation of EOY consolidated accounts.\u00a0<\/span><\/p>\n

    Benefits of forming a parent company – particularly those formed between SME’s – can include:<\/span><\/p>\n