A merger, generally speaking, involves the voluntary fusion of two companies that have roughly equal value. It also happens on roughly equal terms, i.e. both companies consider one another on par and simply move to become one legal entity instead.
There is an unfortunately high rate of failure for company mergers due to the legal complexities behind them. However, there are ways to improve the chance of seeing a successful merger happen.
Focusing on integration and pre-planning
Inc delves into some of the top-rated ways to have a successful merger. First, start off the deal already having a plan in place for integration. A top mistake involves waiting for a transaction to finish to come up with an integration plan. This creates a messy, hasteful and unorganized scenario where employers and employees alike may feel frustrated.
Instead, have an integration team already in place. This team must have the ability to integrate cultures, operations, finances, technology and organization all from day one of the merge.
Thorough negotiation and investigation
Next, be thorough with negotiation. Most people will focus solely on the price, but a merger will handle many more aspects than that. Negotiate on other matters like survival periods, escrow and earnouts, too.
Always remain thorough and complete the due diligence before diving into a merger, too. Though this is a somewhat time-consuming and costly step, it is crucial. No one wants to hop into a merger only to realize that the company they merged with had financial baggage that cursory checks did not reveal.
By keeping these tips in mind, it is easier to complete a healthy and successful merger of two businesses.
