Congratulations! You’ve determined that the succession planning solution or growth strategy for your practice lies via a merger and you’ve selected your affiliation partner. Now what?
Most firm owners and partners are confident they can execute a successful deal without too much difficulty, thereby keeping any collateral problems to a minimum. So, when they suddenly encounter a number of unforeseen roadblocks, that smooth path to transition they envisioned suddenly becomes riddled with potential pitfalls and often grinds to a screeching halt. But it doesn’t have to be that way.
If you know what to look for you’ll be prepared to sidestep any threat to the successful closing of your deal. This article will examine a number of common M&A roadblocks and help guide you through them.
Know Why You’re Merging
Mergers occur for a number of reasons – succession, growth, new markets, or to add new client niches. Have a clear and defined reason for your merger. Don’t enter into one of the biggest business decisions you’ll probably make in your lifetime simply because “everyone else is doing it.” Both parties should ask themselves “what does success look like?”
If you have very different goals, it’s better to find out now than at the contract signing. Also don’t fall to the common temptation of merging with a larger firm simply because they’re bigger. Remember, bigger isn’t always better. Better is better.
Poor Due Diligence
When considering any merger, it’s critical to remember the 4Cs, which are critical to any successful deal: chemistry, culture, capacity, and continuity.