It’s important to consider that business mergers can be both economically and emotionally draining, so don’t expect it to be an easy ride. But with proper preparation and planning, your business should come out of the merger looking better than ever before.
This article will help you navigate some of the most difficult parts of this process: merging employees’ emotions with their new roles in the company, preparing for economic changes, making sure everything runs smoothly through all stages, and getting back on track as soon as possible afterward.
Learn what you need to prepare for a business merger and what you need to do before, during, and after the process.
Pre-merger prep: Seven things you need to do
The first step in preparing for a business merger is assessing your business and understanding what you hope to gain from it. Once you know you want to merge, you need to determine the business value of both entities. This will help in negotiations and set realistic expectations throughout the process. Here are five things you must do to prep before the merger:
- Assess the business: Understand what you want to gain from the merger and determine the business value of both entities. Apart from the financial side, you must also determine the principles and values of the company and how they’ll mesh with the new business.
- Understand the financial implications: It’s also critical to understand the financial implications of business mergers. This can help you determine what type of business merger is best for your company and whether to take on debt or seek investors.
- Outline the merger’s goals: What are the specific goals of the merger? Do you want to increase market share, enter new markets, or achieve economies of scale? Do you share trade secrets or customers?
- Determine who will lead the merged business: This is a critical question and should be answered as early on in the process as possible. It’s important to have a clear idea of who will make decisions in the future. To help smoothen negotiations, it’s best to get legal representation for both parties. A business lawyer can help draft a contract stipulating the terms of the merger.
- Deal with employee retention: One of the most difficult aspects of a business merger is employee retention. It’s important to have a plan in place for who will stay and who will go. Employees are often reluctant to change jobs, so it’s important to be clear about what the new company culture will be like and what
- Map out the cultural changes: Mergers often result in a clash of cultures. It’s important to be prepared for this and have a plan to help smooth the transition. This might include training employees on the new company culture or setting up social events to help everyone get to know one another.
- Draft a communication plan: Planning how to communicate the business merger will save you time, money, and headaches. It’s important to have a clear plan in place so that all your business partners are on the same page in the future.
During the merger: Five essentials
It’s vital during business mergers to manage employees’ expectations and emotions about the changes. Mergers can often result in job losses, so it’s important to be upfront with employees about what to expect. You should also:
- Keep everyone informed: Make sure all stakeholders are kept up-to-date on the merger’s progress. This includes employees, shareholders, customers, and suppliers.
- Ensure a smooth transition: The goal is a smooth transition during the merger. This means keeping business as usual as much as possible and minimizing disruptions.
- Train employees on the new company culture: One of the biggest challenges in a business merger is merging different cultures. It’s important to have a plan to help smooth the transition.
- Set up transitional HR policies: Temporary pay adjustments or allowances, especially for interim roles, flexible working hours, or telecommuting to ease employees into the new business environment.
- Execute a handover plan: While it’s important to keep business running as usual during the merger, don’t forget to execute a smooth handover between the two companies. This should include an overlap period so that both companies can get to know each other and ensure a smooth transition.
After the merger: Four things you need to do
Once the business merger is complete, there are still some things you need to do to ensure a smooth transition:
- Monitor the progress of the merger: Keep track of the results of the merger. This includes evaluating how well both teams are working together, whether key processes are running smoothly, and if any problems need to be addressed immediately.
- Map out new strategies for growth: The business merger might have led to some changes in your company or product strategy. Map out new plans for growth accordingly with the help of your team.
- Update company policies: As the company grows and changes, your company policies should too. Update them accordingly to reflect the new business landscape.
- Prepare for potential problems: Mergers are not always successful. Prepare for the possibility that things might not go as planned and have a plan to address any problems that might arise.
The most important thing to do during a business merger is to have a plan in place for how you’ll deal with any challenges that come your way. Have clear communication, be transparent about the changes, and ensure everyone feels supported throughout the process. The more prepared you are for any potential problems or hurdles, the smoother the merger.