There are signs that merger activity is on the increase. Mergers are a great way of achieving solutions to problems such as how to increase fee income, widen the pool of technical expertise and/or achieve more geographical reach but to be successful they need a great deal of effort and skill on the part of the senior management team. A merger can easily distract people for up to two years with the result that instead of accelerating business growth, it can actually stifle it.
Statistically most mergers fail as combining two ‘bad’ firms doesn’t make one ‘good’ one. In my experience, successful mergers are based on shared values and aspirations rather than whether the figures work. To succeed both firms and all of their people must want to work together and feel that the new business will succeed in the long-term.
Talking about values may seem too ‘soft’ a subject at the outset of merger meetings and it is much easier prepare agendas to look at lists of clients and business accounts. However, the earlier that values are aired and agreed the better. Not only does this exercise allow people to see that both firms have a lot in common, they can provide a frame of reference for later negotiations, particularly when misunderstandings and surprises occur.
They also provide re-assurance to all of both sets of partners that the combined firm will continue to represent what is important to everyone and as a result, will make the changes that will inevitably be required easier to deal with.