If you’re in the process of growing your business, then a merger can be a great way to combine with another business or take on a business partner to push your company to the next stage. However, for a merger to be successful, it needs to be managed properly. Do your research well in advance; SmartRoom has the ultimate M&A checklist which can help, and follow these dos and don’ts of managing a merger.
Do take the time to properly get to know the other business owner. You’re going to be working very closely together from now on, so it is very important your personalities are a good fit. Can you work with this person every day? Are you sure that they are as committed to the future of your company as you are?
Don’t rush the merger, but also don’t let the whole process drag out for too long. Expect the merger agreements to take several meetings between you, the other business owners and your lawyers to work out all the details. If the process is taking too long, don’t be afraid to cut your losses and walk away from the deal.
Do your homework. If you’re going to merge your business with another company, then you need to know that there are no hidden problems waiting for you. Bring in professional help to do this to make sure nothing is missed. You should make several reviews of their finances. You will need to know the history of the business, and how the business operates. Get details of any debts, employee contacts, property leases and customer files. Expect the other business to require the same information from you.
Don’t merge if the benefits of the merger are one-sided. If either side is going to be disgruntled by the deal, then this is a bad start to getting into work together. If they are any concerns about inequality, address these early on in the negotiation, and iron them out.
Do realise that the real work of making a merger successful only just begins when the agreement is signed. In reality, the work only starts there. Getting what you have agreed to work in practice can be more difficult. There are often teething problems when two businesses merge, especially if you are combining workforces. People may be nervous about a merger mean for their job, and there may be a need for staff changes. You may also need to do some work to help the new combined workforce work effectively together. Lead by example, and make the effort yourself to work well with the new team and be open to changes in ways of working and company culture.
Don’t let your employees learn about the merger from a third party source. Too often, staff learn about mergers by reading about them in the trade press. This makes them feel unvalued and may cause a lot of concerns about jobs. Keep your staff informed and give them the opportunity to ask questions.
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