Business mergers can be a big deal, ushering in major changes both for companies themselves and for the markets and consumers the companies impact. It can sometimes happen that business mergers end up changing the market itself, and not always for the better. This can occur when the level of competition shrinks as a result of a merger. The recent merger of two real estate companies, Trulia and Zillow, has raised some concern in this area, at least for some.

Zillow has apparently agreed to purchase Trulia for $3.5 billion, which would put an end to the nearly nine-year competition between the companies. Both companies are Internet portals which utilize Multiple Listing Services to provide leads to real estate brokers. Both companies also sell ads. Some in the industry have pointed out that a merger between these companies could potentially end up crowding out competition and dominating the market. A recent article published by Business Insider speculates that a merger could do this within a year or turn. 

Others, though, have downplayed the risk, pointing out that the numbers involved in the merger are not that big, and are in fact rather small compared to large brokerage firms in terms of annual sales, number of employees, and other parameters. While smaller firms and local agents may feel the impact of the merger, it is said, the impact will not be that significant on everybody else. Time will tell, of course, exactly how the merger changes the landscape of the real estate brokerage market.

Companies who are pursuing mergers, of course, need to understand what their long-term and short-term business goals are, and have a solid plan for achieving those goals. When merger can serve those goals, it is important to structure the agreement in a way that takes the company’s interests into account. Working with an experienced attorney can help ensure this. 

Source: Business Insider, “The Zillow-Trulia Merger Could Radically Reduce America’s Realtor Population,” Jim Klinge, July 26, 2014.The New York Times, “Zillow to Buy Trulia for $3.5 Billion in All-Stock Deal,” Michael J. De La Merced, July 28, 2014.Fox Business, The Zillow-Trulia Tie-Up is Less Exciting than You Think,” Steve Tobak, July 30, 2014.