6 Elements that can make a merger work

24 Dec 2013

Completing a merger can be a complicated process and it’s little wonder that, without professional help, many mergers never get past the initial conversation stage. If you’re considering a merger as a way of growing or consolidating your firm, then it’s worth bearing in mind some of the key elements that contribute to successful mergers.

Have a plan or be confident in someone else’s

There needs to be a good reason for why you are choosing to merge and a future plan for what the new business will look like and how it will operate. If this plan isn’t coming from your side of the merger then make sure you are confident in the other side’s ideas for the new business and contribute to shaping these where appropriate. You might not have formulated the plan in the first place, but you will need to make sure it’s implemented properly and works for the firm when the merger is completed.

Match cultures first

Processes, working arrangements and business aims can change over time but it can be very difficult to change a firm’s culture, especially where that culture has been embedded for a significant time, in the case of a merger between two firms with long histories or established traditions. Matching cultures first will help the new firm and its employees to establish common ground, before the necessary day-to-day work gets underway.

Make sure the conversation is focused on looking forward, rather than protecting what’s already there

The temptation with mergers is that both sides can become interested and invested in protecting their ways of working and they see certain elements of how their firm operates as unchangeable. It’s important to state these things upfront to enable a smooth process but it’s even more important to focus on your new future. Whilst you may have always operated a certain way, there’s nothing to say that you can’t improve that element of your business through the incoming help and expertise you’re about to take on.

Recognise that a merger is a powerful tool

Mergers can take firms a long way in a very short space of time, which means it’s extremely important to recognise the business potential inherent in the process you’re about to complete and the possibilities it may well open up. Equally, like any powerful tool, mergers can be dangerous too. A failed merger can have serious business consequences, depending on the point of the process at which the merger fails. Recognising the power of your potential merger and treating it appropriately is key to a successful approach.

Identify what the merger improves for you and your clients

You might merge to fill a skills gap in your own workforce, to improve some of the services you offer, or to form a powerful new force in the marketplace, particularly if your merger is with a rival business. Whatever the reason, make sure you have identified the positives of the move and communicated these clearly to your current clients. Merging with another firm can create a lot of uncertainty for everyone, so clear communication of the positives is even more important than usual.

Consider what the marketplace will look like after your merger and what your place in this marketplace will be

As mentioned above, a merger can be an extremely powerful tool which, when successful, can create a firm that will go on to be a powerful market force. As such, your business planning will be affected because your firm will no longer be in the same position it was when you last created your core business plan. Give some thought to your potential new position in the marketplace and how this will impact how you currently do business.