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Merging your business comes with its perks and pains depending on the decision you take. However, whatever the case may be, merging your business with another is a major milestone. For many, there have various reasons for merging their business with another. It might be to salvage declining fortunes, expand into new markets, stand up to a powerful monopolistic corporation and so on.  
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On a bad note, mergers fail when there is a level of mistrust and poor communication. However, with credible preparation, you can be rest assured that both businesses are set on a course to achieving what the merger sets out to accomplish. In this article, I identify six things you must consider to ensure a successful merger.
  1. Consistent Communication.
It’s essential to communicate effectively and truthfully with staff, customers, suppliers and others affected by a merger. Don’t be worried about communicating with your team of workers. Of course, news of mergers can be unsettling. Your team, especially, can be disturbed by the news, so it’s important to communicate why it’s happening and emphasis the positives. With effective communication, your team will certainly feel much better and will be inclined to have a more positive attitude to a merger if they know what’s happening, why and when, compared to being kept in the dark with only half-truths, gossip and rumours to rely on. If the merger will cost members of your teammates in a way that cost them in a negative way such as losing their jobs or switching roles, it is advisable to be honest with them so that they can prepare themselves ahead of time. Similarly, your customers ought to be carried along even if the service and how it’s delivered to them is not likely to be affected.  Suppliers may also be affected if, say, invoicing and payment routines alter, so be sure to speak to everyone affected.
  1. The New Business Arrangement.
Both financial and operational structures require clarification: a.) Financial The question of tax arrangement must be discussed before the merger. The structure of taxation and other monetary demands must be agreed upon by the parties involved. How are both businesses set up in terms of accounting and tax? Are both companies LLC (Limited Liability Company)? b.) Operational Also how the merged business will be operated after the merger must be on the discussion table. The question of how will the merged business be managed must be dealt with before you put pen on paper. Will it be a combination of personnel from both companies or will one management team prevail? This is a crucial area to clarify as mergers can sometimes have conflict over leadership and governance issues.
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  1. Juggling Two Different Cultures.
Company culture is pivotal to business growth as it captures the vision and mission of the business. Thus, incorporating the company cultures of two different businesses can be a challenge, but it’s integral if the two companies are to work harmoniously together. The best way to go is to evaluate and assess each company’s philosophy, management style and approach to customer relations and future planning methods. Is everyone on the same page?
  1. Agreements And Documentation Need To Be Formally Signed.
Every letter of connotation you craft and sign should be vetted carefully by trusted legal and accounting professionals to confirm you’re not earmarking on a binding pact that could leave you in a helpless position. Ensure confidentiality and non-disclosure agreements are comprehended completely by both parties, and ‘change’ documentation is fully agreed upon and drawn or re-drawn. For instance, if employee administration and contracts will be handled differently under the new management, then ensure revised contracts of employment and similar are formulated.
  1. Verify What Has Been Agreed.
Define precisely what you and the other business have agreed to commit and contribute to the merger. For instance, if your partner’s IT structure is superior to yours, will you benefit from it? If the consolidation comprises of you having access to their customers, how will this happen and what scope is there? Likewise, the future financial commitment of each partner must be agreed upon before any merger can take place.
  1. Plan For The Worst.
There is a likelihood that mergers might fall through despite everyone’s best efforts and due diligence. The best way to prepare for merger failure is to put provisions in place that will enable your business to continue its operation unscathed as possible. Merger failure is not strange, therefore, plan for it  Featured image source: Corporate Finance Institute
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This article was first published on 18th February 2022

nnaemeka-emmanuel

Nnaemeka is an academic scholar with a degree in History and International Studies from the University of Nigeria, Nsukka. He is also a creative writer, content creator, storyteller, and social analyst.

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