As you run your adult website, you may seek new opportunities to scale up and grow within the industry or even enter new markets. To do this, you may seek outside help from businesses like yours by entering into a partnership or merging the two businesses.
Both offer their own set of advantages, from innovation to shared responsibilities and finances. However, certain considerations should be taken before you jump into either to ensure that you earn a profit and have an exit strategy in place when it comes time to sell up.
Adult Site Broker will investigate the differences between business partnerships and mergers and determine which is the best option for you.
This is a good time for a disclaimer. We are not attorneys, and this should not constitute legal advice. Always consult your attorney on legal matters.
What is a Strategic Business Partnership?
A strategic business partnership is when two businesses jointly undertake projects. In the business world, without combining to become one new company, there are currently a few different types of business partnerships you may wish to undertake.
You could enter a joint venture, where you and your business partner create a new entity together.
Currently, there are three main ways this can happen:
- A general business partnership is one in which you and your business partner share equal financial and legal responsibilities of the business, with profits usually shared equally.
- A limited liability partnership (LLP). This arrangement limits partners’ liability so that, for example, if one partner is sued, the other partners’ assets are not at risk. Legal and accounting firms usually arrange these, but others may also wish to use one. Or a limited partnership, where one person is a silent partner who does not take part in the day-to-day running of the business but is usually invested in it.
- An alliance in which you collaborate closely while remaining separate businesses, such as a porn website collaborating with a porn games website and offering only games from that site on its site.
What is a Business Merger?
A business merger is the voluntary fusion of two companies on broadly equal terms into one new legal entity. The firms that agree to merge are usually roughly equal in size, customers, and scale of operations.
These are done to gain market share, reduce operational costs, expand into new territories, unify common products, grow revenues, and increase profits, benefiting both companies, with shares distributed among the owners of the original businesses.
Before you decide which is best for you, it is crucial to consider the advantages of both.
Advantages Of Forming a Partnership Or Merging With Another Company In The Adult Industry
In the business world and the adult industry, there are many advantages to starting a business partnership or merger with another adult company. Some of the reasons we have listed below:
Access to New Markets
Merging or partnering with another adult business can give you access to new international audiences.
Access to New Technology
A brand can add a new dimension to its product or service offering by accessing a partner’s technology.
Innovation
Merging with or partnering with another business can offer you new, creative, and innovative opportunities, such as bringing together talent, expertise, and collaboration.
Shared Responsibilities
Forming a strategic business partnership can help you mitigate risks and share financial responsibilities, and it can also lighten the load of owning an adult business in the long run.
Financial Advantages
From sharing costs to additional capital, merging or entering into a business partnership gives you more capital to invest in your business. A merger also benefits from cutting costs, as you can buy products or materials in bulk.
Larger Share of the Market
By merging your businesses, you can gain a larger market share, protect yourself against competition, offer better deals, and attract more customers.
Brand Awareness
Being associated with another well-known company can increase awareness of your brand. Each company can introduce its partner to its customers, expanding the reach of both brands.
More Business Opportunities
No matter if you have a porn website or a sex toy retailer, when you merge with another company, you have the opportunity to expand your service offering on your adult website.
As part of a business partnership, you can work together to offer something customers couldn’t get before, such as when phone companies partner with app developers to pre-install the latest app on their latest models.
Spreading Out Risks
Merging can make a company safer financially. If the companies were in different types of business, the new company would be less affected if one market wasn’t doing well, because it would have other sources of income.
Considerations when forming a partnership or merger
However, before you jump into one, you must consider certain considerations.
Financials
First and foremost, you must consider your own and your potential merger partner’s or business partner’s finances to avoid taking on any debts or liabilities.
By merging with another adult business, you may find that prices rise due to reduced industry competition (as there are fewer adult companies) and a larger market share, as well as the costs of merging in the first place. It is also worth considering who will ultimately be in charge, as in many cases one owner takes over both companies.
Mergers and the combination of operations, teams, systems, and processes can be time-consuming and complex. This can disrupt business operations and lead to redundancies as certain assets are no longer needed.
Risk of miscommunication and mismanagement
As businesses come together, whether through a partnership or a merger, with differing cultures and visions, the risk of miscommunication and mismanagement increases. A lack of communication can also lead to breakdowns between businesses, as promises go unfulfilled and expectations go unmet.
Exit strategy
In addition, entering a business partnership could cause problems later on if you wish to sell your adult business and your partner doesn’t, without a proper exit strategy. In a merger, consider the share ratio between you and your partner, which can also affect your ability to exit later.
Other considerations when choosing a business partnership over a merger could include the risk of either side becoming too dependent on the other.
Sensitive Information Policy
If one company relies too heavily on its partner, it can be in a tough spot if the partner runs into trouble, changes direction, or ends the partnership. This dependency can make the company vulnerable. On the other hand, it can also cause issues with sharing too much information.
As businesses share resources, ideas, and information, there is a concern about accidental disclosure of sensitive information and ensuring neither side can use it against the other if the partnership doesn’t last.
In addition, forming a partnership usually involves signing agreements that outline each company’s role and share of the profits. However, if disagreements arise over money or responsibilities, resolving them may require legal help, which can be expensive and time-consuming.
Branding and Marketing
Finally, as you merge or form a partnership, you will also need to consider your branding and marketing, as they will now need to reflect both companies as one.
In some cases, companies choose to rebrand entirely; in others, they discard one of the company’s branding elements and rely on the others. You must budget for your new logo, brochures, website, and social marketing.
However, you can mitigate these potential disadvantages by ensuring that, during the talking process, you share aligned values, ethos, and goals. Afterward, ensure that your partnership agreement clearly sets expectations, outlines a communication strategy, and includes an exit clause.
It might also be worth doing a test run before entering a full agreement to ensure you are both on the same page about what you want and to see whether your adult businesses work well together.
Conclusion
As you can see above, mergers and business partnerships offer a range of benefits for you and your adult company, from new ideas and innovations to cutting costs and entering new markets. However, both come with unique considerations that could make it tricky for you in the long run, including the need to make redundancies when it comes time to sell your business.
When you decide to enter into a business partnership or merger, it is essential to choose the partner you want to work with and clarify the goals and expectations before starting the process.
When done correctly, both can benefit your adult company in the long run. However, it is crucial to choose the option that best reflects your business goals.
Read more from
More from Adult Site Broker here:
