A merger of two companies can be a smart competitive growth strategy. But when you combine two companies, you also join the people of two companies. Don’t let these possible stumbling blocks slow you down.
The Human Factor
While the deal makers of an acquisition may only be concerned with the new organization’s strategic and financial benefits, the people in your new organization can be the deciding factor in the success or failure of your merger. So be open and transparent about what is happening. Be sure to let employees know: (1) why this merger is happening; (2) what the end goal is and (3) the practical impact on employees and their families.
A failure to communicate the process and timeline can put the employees of both companies on edge. Likewise, pretending that everything will stay the same, that there will be no layoffs or reorganization when you know that it’s necessary, won’t help either company’s employees work together as a team.
Pending Litigation
As part of due diligence, both companies will need to understand what litigation or possible litigation is pending. They will also need to ensure that all insurance is adequate and that the company is complying with all applicable laws and regulations. Why? The merged company will assume liability for all pending litigation and legal issues that arose prior to the merger. The last thing you want is for the newly formed company to be socked with a lawsuit that you should have seen coming. Likewise, it’s important to ensure that layoffs won’t leave the merged organization facing new lawsuits. So, be sure to consult human resource and employment law professionals.
The “Us Versus Them” Attitude
Finally, you should do everything possible to avoid an “us versus them” attitude. You don’t want employees, or executives, of the two companies engaging in internal power plays. Instead, you should work to merge the cultures of the two companies with thoughtful and deliberate measures. The executives and managers of the company should lead the way. Employees definitely won’t work to integrate if they don’t see their leaders setting a good example.
Who is Robert Gold?
Mr. Gold is head of AEGIS Chicago office. He has close to 25 years of experience in structuring and executing transactions on both his own behalf and for a wide variety of primarily middle-market enterprises in healthcare, technology, real estate development, manufacturing and intellectual property.
His primary area of expertise involves tax-related issues with a concentration on structuring businesses and transactions utilizing partnerships and other flow-through entities. Robert’s legal practice also has involved corporate advice including ownership-transition planning and governance, and the private placement and syndication of securities.
Prior to joining AEGIS, Robert was a Managing Director of The Chicago Corporation, an investment-banking firm, where he currently serves as general counsel and as a senior advisor.
