Unexpected Capabilities. Unmatched Service.

10 Tips to Make a Merger Easier

A successful merger takes a lot more than a few words and a firm handshake. It’s a long, complicated process that involves a lot of cooperation and a lot of knowhow – something that can be in short supply when you’re a business that’s new to the world of mergers and acquisitions.

No merger will be simple, and they’ll all come with their bumps, but these 10 tips can help smooth the process and keep a dream pairing from devolving into a nightmare.

  1. Have a professional perform a business valuation. You’re not going to attract many buyers without a good idea – not just a whimsical guess – of what your business is worth.
  2. Let prospective buyers know. If you’re looking to sell your business, it won’t be as easy as sticking a “for sale” sign out in front of your building. You need to advertise in the appropriate circles to get the attention of those who might have the will (and the financial way) to make a purchase.
  3. Perform due diligence. If you plan to do the buying, it’s not enough to see what a prospective buyout target would do, and say, “Hey, that fits the bill!” You need to study any public information available on the company – from filings to the business’ website – as well as drill for information on financials and operations once you make contact with the company.
  4. Decide on terms. Yes, it’s vital to settle on a final price for the buyout. But there are other terms of the deal to consider, too, such as what personnel will remain, what facilities will be used, naming rights and numerous others.
  5. Figure out tax considerations. It’ll come as no surprise to you that even when it comes to mergers and acquisitions, Uncle Sam wants his cut. Seek out professional tax assistance so everything is correctly reported to the IRS, and to determine how the joint entity will be taxed in the future.
  6. Throughout the process, make sure to keep a constant line of communication open with all parties. That includes your M&A partner, as well as also your employees. A lot of information will be on a need-to-know basis, but you probably shouldn’t surprise your employees with a sudden merger announcement once the deal is done.
  7. Show leadership. This is an extension of communication. Whether you’re the buyer or the company being bought, both you and your merger partner need to demonstrate consistent, strong leadership throughout the process to keep employees engaged and loyal.
  8. Create a merger team. Put a few trusted individuals in charge of making sure the merger goes smoothly. Namely, you need to properly integrate your resources with the other entity’s resources, from facilities to information systems to personnel. That won’t get done piecemeal, so make sure a few employees are dedicated to this specific task.
  9. Be mindful of the clock. You have to manage time well when it comes to a merger. If you make decisions too quickly, you could risk overlooking specific details that might lead to overpaying or merging with a business that doesn’t mesh well with your corporate culture. If you go too slowly, your risk fostering doubt throughout your company, which could lead to personnel losses before the pairing is complete.
  10. Get professional mergers and acquisitions assistance. It’s extremely rare for two businesses to successfully navigate a merger without outside help. You’ll need lawyers, accountants – even IT help. McManamon & Co. can help with many of the steps of the M&A process – from helping you find a buyer to sorting out financial reporting details.

If you’re ready to become a part of a much greater whole, call us at 440.892.8900 or get in touch with us online. We can help you shop your business, or help you shop for your next buyout!

Tags:  , , , | Posted in accounting, business valuation, McManamon & Co., mergers & acquisitions, small business, taxes