4 Crucial Insider Tips To Help Your Company Successfully Complete a Business Merger

If your company plans to undergo a significant merger in the close future, or if you are searching for other businesses to potentially merge with, it’s essential that your high-level leadership understand the basics of a successful merger. Mergers are often complex legal and financial processes that can involve several pitfalls along the way, and ensuring they go off without a hitch requires both insider know-how and extensive pre-preparation. Fortunately, your business can complete any impending mergers or prepare for future mergers by following these four crucial insider tips.

1. Make Sure Your Business Is Currently in Resilient Financial Health

One mistake some companies make when considering a merger is diving in head-first without checking that they’re financially able to complete the merger first. Without strong revenue and generally resilient financial health, the merger may fall through. You may opt to consult with business brokers and other professionals to ensure that your company has all the essential signs of financial health needed, including:

• Regular revenue and profits

• Adequate liquidity for a major merger

• Assets to use as collateral or for investments

• A strong overall capital structure

• A low and manageable company debt load

2. Understand Your Company’s Top Reasons for Pursuing a Merger

If the company’s reason for pursuing a merger is thin or not particularly impactful, the team may not be adequately motivated to see it through and maintain high quality standards. Before you start signing paperwork, make sure you think through your business’s reasons for merging with another company. The most common reasons for mergers typically include a desire to:

• Boost overall profits and revenue

• Strengthen branding and expand the company’s total reach

• Lower costs of operations

• Eliminate unpopular products and strengthen current offerings

• Gain a larger share of the market in the industry

• Keep the company’s shareholders content

3. Designate a Transition Team and Begin Your Planning Early On

If you’ve considered undergoing a merger but haven’t yet designated a transition team, you may be setting the company up for chaos and confusion. A dedicated team not only fosters workplace collaboration but can help work out the kinks of the process. Your transition team can:

• Offer strong leadership and set the tone for lower-level employees

• Prevent, mitigate, and immediately handle any crises or unexpected events that may arise during the transition period

• Handle the big-picture aspects of the transition as well as the nitty-gritty details

• Ensure that the merger is completed without a hitch

4. Focus on Constant and Honest Communication Between the Companies

Lastly, some merger deals end up falling through due to a severe lack of communication between the companies involved, typically at the upper management level. Focusing on frequent and honest communication throughout the merger can resolve this issue. Make sure you:

• Provide regular briefings, memos, and email chains to those involved in the transition to keep everyone on the same page

• Focus on creating a company culture of honesty and open, frank communication to avoid tensions and cultural clashes

• Begin unifying the company cultures early on by finding common ground and mapping out a path forward for the company’s core values and workplace environments

Business mergers are complex matters that often involve months of poring over financial and legal details. In order for your company’s next merger to be completed without a hitch, it’s important to check for strong financial health first, identify the top motivations for pursuing the merger, designate a transition team, and ensure constant communication. By taking appropriate steps now, you can help avoid unexpected and potentially serious problems later in the merger process. These four essential insider tips can help equip your top-level leaders with the insight and know-how to handle any merger effectively.

Nine Top Tips To Manage A Business Merger

Sometimes, the best way to grow a business is to merge with another one or to take on a new business partner. Merging can help both businesses to reach the next level, but in order for it to work well for everyone involved, it must be managed properly. Follow these tips to successfully manage a merger. 

Image - free for commercial use

1. Take some time to get to know the owners of the other business. You’re all going to be working closely together, so it’s important that you can do so effectively. Are your personalities a good match for a productive working relationship? Are they as committed to this merger as you are? 

2. Don’t rush the merger, but don’t let it drag on forever either. Arrange meetings between you, the other owners and both your lawyers to iron out the details, but if things aren’t progressing, just walk away. 

3. Do thorough research into the other company. If you’re going to be tied to them, you will need to know if they have any skeletons in their closet. Visit SmartRoom for advice on finding a broker who can help you to do this properly. At a minimum, you will need to do an in-depth review of their finances. Get a clear idea of how their business operates and what their history is. Ask to see details of employee contracts, customer files, leases for property and most importantly, details of any debts. The other business will probably want to get the same kind of information from you. 

4. Make sure that both sides of the merger will benefit from the agreement. If you or the other party will cause problems later on, then this is a bad start to working properly together. If you do have any worries about an unequal measure, then sort out these concerns as easily as possible in the negotiation process. 

5. Remember that making a merger successful is only started when the agreement is signed. No matter how well you’ve planned the merger, getting these plans to work in practice can be more difficult. All mergers have teething problems in the early days. Staff may struggle to combine workforces, especially if they are worried jobs will be downsized. Changes to staff can bring a shift in company culture which can be a challenge too. To help this process, lead by example. Make sure you are compromising with the new team and working with them well to promote productive ways of working. 

6. Make sure that your staff don’t learn about the merger from anyone other than you. It can happen that the staff finds out mergers through rumors or from reading about them in the trade press. Finding out this way makes staff feel undervalued and can cause panic about potential job losses. Make sure that you are the one who tells your staff. Keep them informed about the merger, and give them an opportunity to ask you any questions that they might have. 

7. Don’t force the two teams to interact at first. This can feel a bit infantilizing, so hold off on the organized fun and the mixed seating plans. Instead, offer natural opportunities for the teams to spend time together. Mix up the teams a bit so people can start to work together. Offer some fun ways to interact, like drinks in the office on a Friday night. 

8. Maintain consistency between similar positions. If you have people in similar roles thanks to the merger, make sure that you keep things fair. This means that expectations, accountability, and compensation needs to be the same in order to keep things fair and stop resentment from setting in between teams. 

9. Make sure that you are being positive and confident about the merger in front of staff, customers and clients. Even if you have concerns and are managing problems, then you need to make sure that you’re aren’t bringing those worries onto the office floor. Instead, work on those problems with the other managers and don’t impact your business. 

When merging a business, there are always going to be problems, so it is important to work with the other owners to find a new way of working, new company culture, and a productive work style that will benefit your new merged companies. Make sure all staff still understand what their role is and that they continue to feel valued. Take the merger slowly and put in the work to maintain proper communication throughout the business.