CEO Insider

Thirteen Lesson’s That’ll Bite You if Ignored When Merging Your Business with Another & Especially in Today’s Merger Mania Post COVID Climate!

The path to global wellness in your business may be through partnerships, collaborations, mergers, or associations with other organizations that can exponentially accelerate your business footprint. Just as in today’s new labor climate, McKenzie estimates 20-million workers just this year quit their jobs, another 50-million held up on the unemployment couch, and everyone re-examining what they want from their employment experience, one must examine the individual we align with as well.

Whether your intentions are altruistic or financially motivated, the integration of sides (B2B, B2C, P2P, I2I, and combined assets) is a dance that must be choreographed throughout the integration process to ensure mutual success.

Here are thirteen lessons you never learned in Business School. Use these lessons from my personal work with Fortune 100 Firms, Government Agencies and private sector Businesses as a check-list before entering your next merger or alliance (and consider this a massive list of clues in your next hire, given today’s massive virtual talent pool the post pandemic world has created):

  1. Lesson – Do “You” and the “Other Parties” involved in the intended new alliance have similar Values, Mission, Purpose and Vision Statement standards? If not, this should be a red flag for conversation, or it may very well come back to bite you!
  2. Lesson – Do you or any one Party want the new alliance more than the others? If so, why? Make sure you talk this through with all Parties. If any one person is hesitant to engage, that may very well come back to bite you!
  3. Lesson – Before entering into any new alliance, determine if all Parties are equally vested in future success.  Does the move serve both parties’ professional and or personal long-term objectives? If at any point something seems one-sided, it should be a red flag for conversation or it may very well come back to bite you!
  4. Lesson – Have you vetted the Parties involved, or are you making this alliance merger based upon emotion? If you have not vetted them thoroughly, this should be a red flag for conversation, or it may very well come back to bite you!
  5. Lesson – Just as you should provide all others with your credentials, you should also get the credentials of all involved Key Players, Equity Owners, Executives, Leadership Team, or other Key Stakeholder’s to ensure that they are who they say they are. This will also help you understand their human capital abilities that can be drawn upon for success. Conduct an internet search or consider leveraging a third party to do a background check. If someone’s credentials don’t check out, or if someone has lied about their employment history, this should be a red flag for conversation, or it may very well come back to bite you!
  6. Lesson – Request a copy of all Parties’ “certified” financials (Daily AP/ AR, Monthly AP/AR, year-to-date comparisons) for the past several years. Explore where their money goes, how people are compensated, and what their financial trends have been. Speak one-on-one with the other organization’s CFO (or equivalent), and have their outside CPA firm provide forensic validation of any documents provided. Get everything in writing. If you do not have these or can’t get these, this should be a red flag for conversation, or it may very well come back to bite you!
  7. Lesson – Request a copy of all Parties’ “certified” financial Audits for the past several years. If you do not have these or can’t get these, this should be a significant red flag for conversation, or it may very well come back to bite you!
  8. Lesson – Search online for Government and County public records to see if there are pending or past litigation matters with the other Party(s). Do this for:

    The County (zip code) where the other Party operates
    The County (zip code) where they were Incorporated
    The County (zip code) where the other Party’s Accounting Firm-of-Record operates (if different than previous locations).

    Make sure you cross-reference every possibility. “Trust yet verify,” as former President Ronald Regan once said, and a measure of pre-work may save countless problems later. Anything you find should be a red flag for conversation, or it may very well come back to bite you!

  9. Lesson – Review the HR employee roster to determine what the turnover rates are in the hourly and salaried personnel for the past several years. Evaluate how the owners treat their most loyal, rock-star and senior employees and how they exit retiring members. This is an accurate barometer of what you can expect from their existing culture. Conduct an HR audit to determine the HR Capital talent level. Remember that a merger is more than brick-and-mortar and inventory; it is the intellectual capital and connectivity. This should be a red flag for conversation, or it may very well come back to bite you!

    Do you have an inventory of the “intent-to-stay” of key and critical talent? And, have you asked for and evaluated from your perspective the “flight risk” of all essential personnel, and then every employee?

  10. Lesson – Warning: This one is very non-PC. If a key stakeholder, Individual/Party in the context of the business workplace alliance (the exception would be if the merger or partnership is of religious entities) carries their religion or religious views as a dominant public placard, RUN!

    For thirty years, I have had TWO exceptions of this statement. Both are active and long-term clients of mine! I have found this to be a “mask” for very troubled and deceitful individuals. I want to be proven wrong … I am not suggesting that people of honor are not spiritual or religious. People can have personal private religious convictions that drive their integrity and actions.  However, in the business marketplace, if people start with religion as their GPS and want you to assume their belief system, then be cautious. This may come back to bite you!

    This is an easy one to vet, to ensure your not in the presence of a wolf in sheep’s clothing, look at how they live all aspects of their life and how they treat others around them.

    A great mentor of mine and contributing writer on many occasions to my www.ProfessionalPerformanceMagazine.com, Christian Business Leader Mr. Buck Jacobs, Founder of the C12 (Team – C12 (joinc12.com) CEO-to-CEO peer group has schooled me on why this is and why it is sadly so prevalent today.

  11. Lesson – If the other Party purports to have business transactions that dictate that they would be paying sells/use tax, payroll tax, IRS taxes, check with all associated legal entities, governmental agencies. Ensure that the other Party has been doing so and is in good standing. Remember, if you forge an alliance, the other Party’s history will become your reality, and that will be your future obligation and reputation. This should be a red flag for conversation, or it may very well come back to bite you!
  12. Lesson – If at any point in the courtship or infancy of the alliance merger, any key stakeholder keeps secrets from other key stakeholders, they are disingenuous people, and you will always be the one that gets bitten in the end. Time for a significant conversation or immediate CYA and exit strategy deployment!
  13. BONUS LESSON – Consider how the key stakeholders treat their veteran employees and their own spouses and families. This is how you will be seen and treated in your new blended business relationship or enterprise – guaranteed. History always repeats itself!

Just as more than 50 percent of Americans in this global community are not married today, more than 50 percent of marriages today end in divorce (according to the American Catholic Archdiocese). More than 80 percent of start-up businesses do not survive their fifth birthday (according to the US Chamber of Commerce). Finally, Seventy-five percent of Merger & Acquisition deals implode within three to five years (according to Deloitte). You do not want to have the best intentions of an alliance partnership end in an ugly separation.

Always make sure you have an exit strategy (prenuptial) to a business alliance, that you thoroughly vet the agreements, and that the alliance is legally binding. If you began with the end in mind, the exit solution clearly mapped out, then integrating YOU, Inc. for global business wellness would be healthy, and then these twelve Lessons will not bite you!


Written by Dr. Jeffrey Magee.

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Dr. Jeffrey Magee
C-Suite and Military General clients come to Dr. Jeffrey Magee for ENTERPRISE-WIDE Talent Development & Human Capital succession architecture. The need today to collapse down years/months/weeks into days is critical! Sustainable Solutions NOW. Jeffrey Magee, PhD/CBE/CMC/CSP/PDM is the “Thought Leaders Leader.” Jeffrey is the publisher and editor-in-chief of Professional Performance Magazine, editor of the LEADERSHIP MASTERY and SALES MASTERY blogs, a former nationally syndicated Radio Talk Show Host, as well as a publisher author of 31 books, translated into 21-languages, to include 4-Best Sellers (YOUR TRAJECTORY CODE/WILEY)) and 4 graduate management text books (THE MANAGERIAL-LEADERSHIP BIBLE/PEARSON EDUCATION). He is a leadership columnist, and highly sought global professional speaker on performance psychology.

The recipient of the United States Junior Chamber’s TEN OUTSTANDING YOUNG AMERICANS (TOYA) Award, and the United States National GUARD’s Total Team VICTORY Medal for civilian contribution to the Armed Services. Massive hyper GROWTH & PROFITABILITY is the resume of 100% of our 2020 clients - Business Growth & Leadership Development: Working with Organizations at the C-Suite level to protect & leverage their most valuable asset - their PEOPLE!


Dr. Jeffrey Magee is an opinion columnist for the CEOWORLD magazine. You can follow him on LinkedIn. For more information, visit the author’s website.