Much like a marriage, merging companies can include the best and worst of times. It’s on us to decide whether or not our potential partner is a good fit. Take a look at these three points before you say “I do.”
1. Get the Facts Straight
Do your due-diligence. Never go into the merger without a clear understanding of the terms in play. What are they? How will they be executed after the deal is signed? These questions need to be answered. Try to visualize life after the deal, even the day-to-day. These issues can and have been notoriously overlooked, which have cost companies millions.
2. Look for a Mesh in Company Culture
You really have to know your potential partner – after all, this is corporate marriage we’re talking about. It’s important to examine cultural issues as closely as the numbers. Although it’s not on the balance sheet, it’s just as important. We keep going back to marriage, but the analogy rings true – if you partner up with someone with differing views, you are poised for disaster. While it’s not always easy, you must integrate culture as best you can to sustain a long-lasting relationship.
3. Plan for Worst Case Scenario
First, be aware that things can go wrong – or at least not as good as you hoped. If you own a business, you will need to accept and live with this fact. Just like it’s smart to have a prenuptial agreement in a marriage, it’s also smart to have an exit strategy for your company. Nobody wants to think about divorce, but it’s best to be prepared. Find a strategy that ensures the continuation of your business if the merger fails. Nail down key assets and make sure they are protected.