5 Biggest Reasons Mergers Fail

1. Ego. Normally this is manifested in unwillingness on the part of the partners in both firms to adapt to the new way of doing things required to make a merger work.

2. Culture. While the larger firm’s culture usually primarily survives, adopting features of both firms’ cultures will normally lead to a better environment after the merger.

3. Change. Instituting change slowly wherever possible will lead to less impact on clients and staff and can help maximize the retention of both types of constituents. Mergers without high levels of staff and client retention often are not successful.

4. Inadequate capacity. In mergers where some partners or critical staff members may soon be leaving due to retirement or succession, or where there is planned staff attrition, professionals need to be replaced soon after the merger is effective. If the successor firm lacks the existing excess capacity to handle the new requirements, and fails to execute on its plan to acquire new resources, in most cases the deal will eventually fail or at least struggle.

5. Communication. Management teams that fail to fully communicate to the combined team the rationale for the transition plan, what is expected, and how to obtain help when it is needed may find people not executing the plan and resentment building.

Mergers can be a tremendous tool that can help accomplish growth, succession, niche development, addition of talents and marketplaces and much more. They are a key tool in today’s economy where organic growth is more difficult and succession issues loom for many baby boomers. Understanding the pitfalls will help you create a more successful merger. Below are links to two different articles that will reveal many things to help guide you away from the road bumps to safety.

The first article is from the Journal of Accountancy and the second from CCH Practice Management Forum

JOA article link: http://www.transitionadvisors.com/articles/m__a_of_cpa_firms_understanding_the_roadblocks_to_successful_deals_joa_mar2009_2.pdf

CCH Practice Management Forum link:

http://www.transitionadvisors.com/articles/succession_planning_what_are_the_roadblocks_in_most_mergers_is_anything_easy.pdf