5 Tips For When You Are Considering A Merger
For the final installment in our mergers and acquisitions theme, I wanted to pull in some personal experience and share five things I did before I merged my printing company with another that really helped solidify our relationship and give me the confidence to make such a huge move. These same things are what I discuss with my own clients in their mergers.
Your contract is like a prenup. You have assets you want to protect as you go into a merger. For me, it was my clients. I had a line drafted in the contract that my clients would remain my clients, even if the partnership failed. This was a non-negotiable for me. Think about what is important to protect as you go into a merger, review everything with your attorney and lean into their counseling. They are legal professionals for a reason and can guide you in this process. I know my attorneys were a huge part of my merger success.
Keep your support circle close. For me, part of what I asked for in the merger was that we stay with my bank, as I had a very close relationship with them (still do) and my accountant. Keeping your trusted advisors and people you know and respect around you is helpful as you enter new territory. There is give and take in mergers and both parties need to determine what they will compromise on and what they will not.
Work together before you sign on the dotted line. If you have the opportunity to collaborate before you make any legal commitments, I strongly advise you do so. I had the chance to work with the printing company I merged with for about 6 months. It was a wonderful time of learning about one another, our work ethic, our habits, our strengths, our personalities, etc. If you see red flags in this process, it might be time to walk away.
Talk through money in detail. It’s not just about what is said, it is about what is shown. Ask for, and look at, proof of the numbers. Review them with your accountant, CFO or other financial professional. Look at their overhead, your overhead, the potential profitability and growth strategies. Does this make sense for both of you? They will in turn be doing the same, so prepare your own numbers in great detail, as well.
Align your values. Do you have the same values as business owners? Family values? Employee values? What will affect business decisions and are you on the same page with the big things. This one area could be the reason the deal falls apart. But a misalignment in values will not bring success. So it’s worth exploring and having conversations.
You can always walk away. And it’s best to listen to your gut above all else.
Think about the short and long-term benefits of the merger. Look at every angle. Ensure you are going in with a clear mind and an open heart.
If you find yourself in a position like this and want to chat, feel free to reach out anytime.