5 Steps to a Successful Business Merger

I just completed a merger, and the good news is that it didn’t kill me. Though mergers are, on the whole, a considerable risk for both parties—especially when merging two small businesses—they can prove rewarding and profitable.

If you’re considering a merger for your small business, the five steps I outline below will show you how to successfully merge two companies and ensure you are well prepared while keeping your sanity intact.

1. Kick the Tires

Test the business model before you commit. First, look at the type of business you run and the focus and reputation of your potential partner. What are the benefits of merging companies? Would you broaden your offerings together? For example, if one of you focuses on branding and marketing and the other specializes in data, could you produce full-service projects as one team? What kind of clients are on your current roster and what types of clients could you pursue if you joined forces? Would your market share increase? Could an expanded team yield success? Establish your goals and metrics for success in this stage to see if both companies align on present practices and your visions for the future.

Get into the details. To put it plainly, you’re thinking of dissolving two independent companies to start an entirely new one. There’s going to be paperwork – and a lot of it. Brace yourself and start planning early. Map out everything you’ll need to do for the smoothest transition process possible.

Review your financials and determine if you’ll need an audit or review. Revisit employee contracts. Determine whether either company has any outstanding commitments, like an office lease, for instance. With consideration to the digital presence, will there be a brand-new website or can one of the existing frameworks be modified? Research available URLs that are applicable and available to purchase. What about the new email address domain? Allow time for the process, as it can take months longer than you think.

2. Build Your Culture Before Your Brand

For this step, you’ll need to work backward. If the partnership is effective when it comes to services, clients, workflow and financials, determine if the office cultures would integrate well. Get to truly know the other business beyond its books before signing on the dotted line. Visit their office. Do teams from company X value a healthy work/life balance like yours? Are they more flexible with working from home? Do they enjoy company outings? How does the organizational chart flow? Is it similar to that of your company’s org chart?

Decide how this new company should look from the inside out. Plan time for both teams to get to know each other. This could be anything from a casual happy hour to team building. We implemented a “take a co-worker to lunch” program, for which we randomly selected two employees (often from different departments) to have lunch together, which was paid for by the companies. Fostering team connections allows you to create a healthy work environment and give personality to the development of your new brand identity.

3. What’s Your New Configuration?

Do you need to create an entirely new company or roll one company into the other and rebrand? You’ll need to consider your trusted vendor partnerships, liability insurance, established client contracts, and payroll/HR recourse reconfiguration.

Take the time to evaluate your client needs and determine the path of least interference – no need to undo years of work. If you find yourself getting lost in the bureaucracy, hire an expert. Trust me, they’re worth it.

4. Figure Out Who’s Who

Among other challenges of merging two companies is figuring out how everything, and, everyone will work together. Be sure to define each employee’s role before rollout, so everyone is ready to go from day one. In most mergers, there’s overlap in many positions – including the leadership. Who’s doing billing? Who’s focusing on growth? Who’s getting the team tacos every Friday? What does the org chart look like?

Evaluate team needs to eliminate or add positions accordingly, then align processes and allocation of tasks to avoid any possible confusion. Be intentional and use this period of reorganization as your opportunity to ensure an environment in which everyone is engaged and empowered to succeed.

5. Call Your Clients

Keep your clients in the loop. If you allude to a possible merger in its beginning stages, then let them know when it’s certain. Giving clients insight early on lets them process the changes and implications of the merger and allows you to address concerns they may have. It also provides you with an opportunity to present the benefits of the merger. Doing so can help your clients feel connected, and they are more likely to support the venture and be patient with the transition. It’s your job to show you value their business, to instill confidence in them about the merger and to get them excited for the next phase of your shared journey.

When I went through the merger process recently, taking the time to self-evaluate and build this merger checklist was a welcome and needed exercise, allowing me to reflect on why we do what we do. If you’ve decided a merger is right for your company, whatever the amount of work ahead and challenges of merging two companies, treat it as an opportunity to renew your sense of purpose and enhance what is truly special about your business for the next 10 years and beyond.

Originally published on business.com