Is a Merger Right for Your Business?

One of the most complicated small business decisions you may have to make is whether to merge your business with another. A merger requires a great deal of thought about the complexities involved.

“There’s no real one-size-fits-all formula,” says Mike Myatt, managing director of N2 Growth, a professional services firm headquartered in Delaware. The most successful mergers start when companies look to increase market share and strengthen resources—not to save a struggling enterprise—so it’s beneficial to look at a potential merger as an improvement rather than a saving grace.

Advantages of Merging

Merging with another company brings along its customer base, which can increase your business.

“Merging is a way to encourage growth,” says Myatt. “You can look at it as a way to open up new channels and new markets.”

For example, if you’re a B2B technology company looking to reach out to a consumer market, Myatt says it would be smart to merge with a B2C software company because your services complement each other, and you would automatically have direct access to a new market and already established customer base.

“There’s a type of synergy there,” he says.

Merging can be a great business venture for strengthening a part of your company that is weak, says Chris Robinson, founder of R3 COACHING, a business coaching firm, based out of Wentzville, Mo., but don’t count on a merger to save two failing companies.

“If both companies are broke, chances are they won’t make it together,” he says.

How to merge smoothly
Although merging your business with another  can be a good opportunity to grow, that doesn’t mean it will be easy.

“A merge integrates culture, technology and people,” says Myatt. “Making it work after the fact is where the real skill is.”

Here are some tips for facilitating the merge:

  • Focus on core values: Myatt says it’s important to make sure your values are aligned before joining. One business might be philanthropic and one might be mercenary, but they must have the same core values when merging in order to achieve the same goals.
  • Keep lines of communication completely open: When it comes to employees, treat the merge almost like a marriage, suggests Robinson. You’re bringing together different backgrounds and histories, he says, so there has to be constant communication to make sure everyone’s voice is being heard and no one feels slighted. Robinson recommends putting all goals, boundaries and expectations in writing to guarantee everyone is on the same page.
  • Keep job roles as consistent as possible: “Role changes need to really stay as closely related as possible to what employees were doing before the merger unless an opportunity opens in an area where an employee has the opportunity to do something they are really passionate about,” says Robinson. “You want people to excel with a merger and a completely new role could set up for that employee’s failure.”
  • Encourage team cohesiveness: “A merger is going to be successful based on how you treat the employees,” says Robinson. To help the new team work well together, he recommends having a social event or a team-building session in the early stages of the merge. It will allow everyone to get to know each other better, which makes for better teamwork.

Original post: NFIB

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