Business mergers are often fraught with many problems. Often, it’s due to a lack of planning and communication. If you’re thinking about a business merger, avoid these traps.
Not Talking About the Details of Your Goals
Each person going into the merger may agree on goals, but before you get too far in, you’ll want to work out how to reach those goals. If one owner takes a conservative approach, while the other wants to take risks, it can create conflict in the direction of the company. Discuss your expectations thoroughly before the deal closes.
The Company Cultures Don’t Mix
On paper, two companies may seem compatible. In practice, the two companies may not be able to merge. For example, one company may be used to autonomy while the other has a micro-managing culture. Bridging the gap between the cultures can be difficult.
Who Has Control?
Who will make final decisions when the merger is complete? Think about things like the company name, the board of directors, staff retention and percentage of ownership. It can be difficult for someone who’s held control of their company to give up some of that authority. Work it out before you sign a deal.
Walking into the Unknown
Don’t make a deal without bringing in professionals to talk about the merger. You should work with your attorney and accountant to think through all the details. Will assets need to be sold? How will stock be affected? You should thoroughly understand the other company’s debts, judgements, payroll and tax situation before you sign a contract. How will you handle differing benefits and pay scales when the company comes together? Calling in a professional with merger experience can prevent many of the traps that occur when two businesses merge.
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