Ensuring Success in a Business Merger

Whether to increase geographic expansion, take advantage of economies of scale, or for any number of other reasons, a business merger can be an important strategy in the growth and success of your company. Taking on such an endeavor includes a number of important legal, financial, personnel, and ethical matters that must be addressed before, during, and after the completion of the merger process.

As a way of providing some guidance regarding the merger process, here is a summary of some of the mistakes a company’s merger team must avoid to ensure the successful transition of multiple entities into a single, cohesive, and profitable unit:

• Do not forget succession planning. Many business owners find it difficult to step away from a company, even after making the decision to sell. In addition to its impact on the negotiations and sale price, poor succession planning can result in employees feeling disaffected after the company they work for has been purchased.
• Avoid letting your ego get in the way of a good deal. A business owner who thinks the merger might impact their reputation or legacy can inadvertently blow the deal. It can also prove costly and negatively impact a business’s position in the marketplace. Keep emotions and anxiety in check to prevent those feelings from resulting in poor decisions.
• Take your time. Rushing to get the deal done may result in overlooking small, but important details that can have lasting legal and financial ramifications. Haste to complete a merger can also cause one to miss the signs that they are pursuing a bad deal.
• Keep important details about the deal from going public. Leaked information that makes its way through the rumor mill may end up killing a deal or, at the very least, drawing the proceedings out, which can increase expenses and cause a loss of trust with key investors.
• Do not forget about employee morale. Once the deal is said and done, the future success of the new business will depend to a large extent on the happiness and loyalty of the newly combined workforces.

This is certainly not a complete list of merger pitfalls, but it represents a good starting point when discussing future deals with business partners and your legal team.

With the right kind of help, any business owner can avoid the missteps and mistakes that plague seemingly common transactions. While mergers and acquisitions are certainly complex, SAC Attorneys LLP can provide you with the legal counsel you need to complete a smooth transition. Contact our California business law attorneys by calling (408) 436-0789 to schedule a free initial consultation and learn how we can apply our knowledge and resources to help you secure an advantageous merger result.

Sources:

• 6 Mistakes To Avoid When Dealing With A Major Merger Or Acquisition