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What makes a successful business merger?

| Feb 13, 2012 | Mergers And Acquisitions |

Thinking of merging your business with another one? If you already have another company in mind, congratulations. But how can you be assured your new partnership will be a success?

Just like a good marriage, a successful merger requires a harmonious blend of strengths, experience and common likes and dislikes. Take the example of New Jersey’s Modera Inc. and Back Bay Financial of Boston, which merged in early 2011. After meeting years ago and developing a mutual respect for each other, the heads of both firms did a lot of careful planning before finally tying the knot.

Like any merger, the combination of these two firms wasn’t without its wrinkles. “The cultural part was the hardest,” says one of the firm’s principals. “We had to make sure we agreed on how to operate and that everyone felt comfortable with the work and with each other.”

The firms held a retreat for employees to get to know each other and establish common goals. They also involved workers in decision making where possible. Fortunately, combining workforces is getting somewhat easier with modern technology because they may not need to physically move into one building. Instant messaging and remote conferencing allow people to work from almost anywhere.

Newly merged companies also allow workers to focus on their specialties because there are more people with various skills and experience. A manager at a smaller company may have had to wear a lot of different hats, but once the company merges, there are more people to take on separate roles. Of course, that means everyone has to be willing to give up some control and remember they’re working toward a common goal.

Another issue Modera and Backbay had to resolve was their separate technology. They had to weigh the pros and cons of their different accounting systems and decide which was the best one to stick with. This is another area where merging companies need to remember they aren’t competing, but trying to find the most effective process for the new company.

As you combine your companies, don’t be afraid to explore your differences. After all, varying strengths are part of what makes a successful merger. Just make sure to do as much of learning about each other before you commit. “You cannot learn as you go,” said one of Backbay’s co-founders. “Too many mergers have failed because the principals only got to know each other after the fact.”

Source: Financial Advisor, “Anatomy of a merger,” Karen Demasters, Feb. 13, 2012

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