Going through a merger can be tricky for any business. While a successful merger can mutually benefit both companies, there are many factors you’ll need to consider during the process, such as potential issues with costs or culture conflicts, or the impact on customers.
As experienced business leaders, members of Forbes Business Council understand how to successfully prepare for and navigate a merger or acquisition offer. Below, they share 14 things you should remember when such an offer is on the table.
1. It’s More Than Numbers
Even if the numbers look good, is it a good fit? Most M&As produce dismal bottom-line results and compounded with wrong fit issues, it’s a costly disaster waiting to happen. How does your M&A partner fit with your culture, core values, management style, openness to innovation and change and other organizational intangibles? – Scott Amyx, Amyx Ventures
2. Mergers Of Equals Rarely Work
When receiving a merger offer, it is important to understand whether this a merger of equals or if it is really an acquisition. Mergers of equals rarely work. The uncertainty created and lack of clear lines of authority generally undermines the effectiveness of both organizations. If your company is just being acquired, then you are probably better off running an auction process with an i-bank. – Kevin Murdock, Business Value Accelerator LLC
3. Consider Costs And Culture
The “build or buy” decision for mergers comes down to cost considerations and culture. Acquiring is typically much faster than building, which offers speed to market, speed to a more effective product-market fit, speed to becoming a growth company. The softer side of a merger is the culture fit. Values must align to maximize the efficiency of the human capital between the merging companies. – Silvia Mah, Stella Labs
4. Think Of The Impact On Customers
How will this impact your customers? That is true north. And it’s more than just a question of “whether” to proceed or not, but also “how” you should move forward. What are your priorities to maintain and improve customer loyalty, market share and brand advocates? – Brad Cleveland, International Customer Management Institute (ICMI)
5. Know Your Leverage
Make sure you understand your leverage points. Whether it’s your ability to remain a standalone business or if there are other synergistic partners where M&A might make sense. Having leverage or at least options allows you to remain poised in the negotiating process. This should ultimately allow for the best decision and outcome for your company. If you don’t have leverage, go create some. – Craig J. Lewis, Gig Wage
6. Focus On Your Objective
Have clarity about what you want. Is it just financial or continued employment, or is it making a bigger impact by reaching out to a bigger market and so on. In any case, make sure you have great advice from experienced M&A professionals. Do not do it on your own! – Cyrus Hadavi, Adexa Inc.
7. Be Willing To Walk Away
When involved in any type of merger and acquisition, there are many things to keep top of mind—culture, employees, customers, etc. But there is one thing that should be kept first and foremost when negotiating: Be willing to walk away. If you are not able to walk away, your negotiating position is greatly compromised, and the deal will be one-sided. – Gino Santos, AMN Distributors
8. Keep The Bigger Picture In Mind
At a merger, both parties need to walk away with something that benefits them in the long-term. Keeping the bigger picture in mind is crucial because some decisions that need to be made now may not feel right. However, when everyone has the same end goal in mind, it becomes easier to get to an agreement. – Brian Chew, OC Wills and Trust Attorneys
9. Good Communication Is Key
Throughout the merger process, there will be hard questions requiring honest answers for a successful merger. You must feel comfortable asking all your questions and feel good about the answers. Employees from both companies will need a strong leader to communicate confidence in the end result. With change comes anxiety that can be calmed with a clearly communicated plan. – Jennifer Coy, Beauty Care Choices
10. Don’t Jump For The First Offer
One important factor to consider is that merger and acquisition values are negotiable in most cases. If your shares are not publicly traded, there is always some wiggle room when establishing the final sum of money you will get paid. – Dimitri Akhrin, CRMDialer
11. Don’t Forget About Cultural Alignment And Impact
Mergers which are designed on the balance sheet alone can miss a critical factor: How well do the cultures of these companies match up and what will the impact be on the organic energy of the combined business? Companies are people. They are not technology. They are not revenue. They are the collective ideas, spirit, and values of the individuals who carry the torch every day. – Sean O’Neal, Onclusive, Inc.
12. Evaluate Your Alternatives
It’s important to check the market and try turning the merger offer into a competitive deal. In parallel, it’s crucial to evaluate all the alternatives, from staying independent and estimating the risk and the potential of remaining standalone—including company position in its market, competition, market dynamics and other forces—to accepting the offer and making the exit now. – Alex Lazovsky, Scale-Up Venture Capital Fund
13. Create Value For The Buyer, The Seller And The Market
Studies reveal that value creation through M&A comes from delivering move value to customers and not from cost reduction. So the lens of the buyer and seller should be, how will our customers be better served when this deal is done? Will we access new markets and customers? Also, never fall in love with a company. Love is blind. – Marc Emmer, Optimize Inc.
14. Make Sure You’re Not Selling Too Early
Own 5% of a $100 million company? Or 50% of a $10 million company? It’s a once-in-a-lifetime chance to be one order of magnitude away from generation wealth, and that opportunity may not arise again. You might just want to bet on yourself and see if you can take it one step further. – Ted Chan, CareDash