Business Merger Dos and Don’ts
While they are often essential for company growth, business mergers are serious transactions. Each year, thousands of organizations merge successfully while countless others run into trouble. If you are looking to combine your company with another, you must be careful to merge the right way. Here are some dos and don’ts for your organization’s merger.
Do: Know the Other Owners
While business organizations are inanimate, people own and work inside them. Therefore, you must not forget about the personal aspect of your company’s merger. Try to develop a working relationship with the other owners. Get to know their personalities, quirks, impulses and business objectives. Only when you have a good working relationship can you merge your company with confidence.
Don’t: Get Ahead of Yourself
Sometimes business owners wait until they are in a financial predicament to merge their company with another. This is a mistake. If you rush through the merging process, you miss critical details about the new business arrangement. You may also merge with a business that is a bad fit for your organization. Even worse, you may make a merging decision you later regret.
Do: Your Due Diligence
The only way you know if a merger has a good chance of succeeding is to fully understand the other company. When you are doing your due diligence, you may need professional assistance. Even if you don’t hire an accountant or attorney, you must thoroughly review the financial information of the other company. You must also look at its business history and operations.
Don’t: Forget To Get a Nondisclosure Agreement
When your company merges with another, you share a significant amount of sensitive information. Some may even be proprietary or have intellectual property protection. As such, before you begin merger talks, be certain everyone involved signs a nondisclosure agreement. Since drafting an agreement that passes legal muster can be difficult, you probably want to work with legal counsel to draft yours.
Do: Expect Growing Pains
Following business mergers, many company owners expect a seamless transition. This is almost never the case. Instead, merged organizations often experience workplace unrest, staffing issues, business interruptions and other growing pains. If you know what to expect, you can develop a comprehensive plan for addressing these problems.
Merging a business is a long, complicated process. Still, combining two business organizations is often the best way to ensure business success. Before you begin merger discussions, though, you should know what to expect. By planning mergers effectively, you can likely increase the odds of having a positive experience.