If you are taking part in a merger or acquisition, you’ll know there is a lot that goes into it. Perhaps you’re a little worried about what can possibly go wrong. That makes sense, because this is a busy and complicated process.
You’ll need to do a lot of research and planning before the deal is done, and the amount you do really can determine the outcome. There are times when you are just not in control, and you need to leave it to fate – or other people – to determine what happens next.
But it still makes sense to make yourself aware of all the things that can go wrong when you merge with or acquire another company. This will help you to prepare for potential setbacks, and come out on top.
What problems might arise
Mergers can be expensive and a huge waste of time if problems arise, and there are tonnes of potential issues you might face.
These include:
- a clash of business cultures
- the target business not performing as expected
- staff not supporting the change
- leaders not skilled enough to manage the change
- a complicated merger that results in lots of complication
- problems causing time issues that mean you aren’t meeting milestones
- issues deciding who will run the business
- owners wanting to maintain involvement
- financial bidding battles
This all leads to loss of time and money, and uncertainty.
Diving into a merger with no real thought about the problems that could arise is a really bad idea, because it will almost certainly leave you frustrated, annoyed, and out of pocket.
There are some key areas mistakes you might make that will cause these issues to arise. Let’s look at them a little closer.
Running before walking
Letting your emotions take over and push you forward too quickly with an M&A can be absolutely detrimental to your aims and goals. Mergers driven by passion rather than good sense will navigate you far from the place you actually want to go. Excitement can take over, but you must do your research and planning before making important moves. You wouldn’t buy a car based on how it looks without making sure it runs properly, and you should make sure you’re checking the mechanics of a business you want to buy in the same way.
Conduct due diligence to avoid making mistakes. Don’t let your heart rule your head, or you’ll run into all sorts of issues when it comes to merging your company.
Understanding
It’s really important that you understand the business needs before you commit to a merger or acquisition. Questions you may need to ask yourself include:
- What do we want from the M&A?
- What are our strengths and weaknesses?
- How are we going to get there?
- What issues might arise, and how do we combat them?
Make sure you open the hood of the vehicle and have a really good root around.
Culture
Merging two companies can be a fantastic way to grow. Perhaps you are merging with a supplier, and therefore cutting your margins, or maybe you are swallowing up the competition. You might expect everyone in your company to be happy about that, but it is really important to consider how merging two cultures together might not be easy.
It can take real time and effort to get two teams to work well together, let alone two entire companies! Staff members might be stuck in their ways or resistant to change, and they can take it very personally when you tell them you need them to alter the way they function to match a company culture they are not used to.
If you don’t address differences in culture, you’ll have a whole team of really unhappy staff. Unhappy staff don’t perform. Sometimes they leave. Worse, they can spread toxic rhetoric throughout the office and completely change the vibe.
So it is really important you make sure you’re planning for a merge in culture and have a clear idea of how you are going to do it.
Financial issues
When two companies merge, their combined income can’t be simply added together to equal the value of the company. What if one company is valuing based on cash and assets, and the other including contracts yet to be fulfilled? You may need to seek specialist advice in this area, as not everything is always as it seems. The business will really need to do their research and plan for financial setbacks. Knowing where you are here is really important so that you can plan. Failing to research properly in this area can have dire consequences, including bankruptcy.
Legalities
You may need professional help with this one, too. You really should have a solicitor onboard who specialises in mergers and acquisitions, so that they can make sure your agreement is properly understood and airtight. Nasty surprises are a massive problem for businesses going through this process, and so it is really important that everyone involved knows where they are and what is happening.
Wrong tech
You’re going to need technology, and it’s going to need to be the right kind. Before you invest, make sure you know exactly what you need, and that you’re not only looking at the here and now, but how things will change in the future, or else you’ll end up needing to revise your technology again in a few years. Your usual technology systems are probably not going to work as well now that you’re bigger. Not doing this can be costly.
Get professional help from a Change Management M&A consultant
If you are merging with or acquiring another company, a change manager can help you. Yorkshire Change specialise in helping companies manage huge changes with minimal input and in the best way, so that you can get on with the important stuff, like managing your business.