Business mergers can be highly beneficial. In becoming one, the two companies (both the acquirer and the target) have a unique opportunity to leverage the resources of being a larger organization, which often leads to increased profits and the relief of less competition. An ideal situation, for sure, but mergers are not always successful.
Like any relationship, the decision to become a single business entity should be given the necessary time and consideration of all possible outcomes. Neglecting to do so may very well create more problems than solutions for the companies involved. To avoid that, consider the following tips for establishing a successful merger.
- Begin the downsizing process early
Mergers sometimes lead to employee layoffs or the closing of entire offices, as both parties make attempts to synergize business operations. This is a difficult decision for many companies, but one of the many sacrifices necessary for growth. Once the decision is made to let people go, make all of your employees aware of it, begin the process of termination early and in groups, if possible, to avoid the decline in morale often experienced from frequent, singular departures.
- Put in the effort to retain great talent
Put as much an energy as possible in retaining your brightest stars and key players, who will be instrumental in the new organization. Communicate and prepare them for any changes to their current responsibilities to ensure a smooth transition. Lastly, allay any concerns of being let go in the process.
- Redefine the business culture
Company cultures are often as varied and diverse as the people who’ve created them. Getting over those differences or expecting complete assimilation isn’t realistic. Some concessions will have to be made. Therefore representatives of the organization should sit down together and find ways to share, learn about and compromise on a new, conjoined culture to be the foundation for the organization going forward.
- Re-assess and prioritize projects as a team
Similarly, both organizations may have desired projects are goals outside of the others interest. A part of coming together is being able to explore new things with more capital and shared resources, but only in the interest of both parties. Take a long, hard look at desired and goals and determine how best to approach them in a way that is financially sound and to the benefit of all stakeholders.
- Communicate openly and often
Many leaders have an issue with sharing too much information about their business. Yet, as a team, a newly joined organization must be as transparent as possible, to voice concerns upfront and to ask questions to which they want answers. Build a solid, professional relationship, so that in the presence of problems, both teams can discuss them, strategize and nip it in the bud as easily and cleanly as possible, for the sake of the company as a whole.
This is a great start, but perhaps you have additional questions about whether a merger or acquisition is right for your business. For more information, visit this great blog from the National Center for the Middle Market regarding this topic. Best of Luck!