The SUCCESS Side of Mergers and Acquisitions: Integrating YOU into Them … 25 Lessons Only Life Can Teach-You!

No one would have ever suspected. I have heard people say that and I have heard that internal voice in my head start to beat me up, more times than should be reality … But let’s come back to that at the end of this executive article.

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. COVID served as an accelerator and great global reboot to everything one once expected and could count upon, to what the new realities are to remain relevant and competitive.

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. 

A failed business merger cost me millions-of-dollars and what I learned on the backside of that experience, I never knew to know on the front side.

Here is your vetting check-list for success in mergers. Here are 25.5-LESSONS not taught in Business School. And, potentially 25 missed KPIs when you merge with someone that you have had a prior long-standing relationship with, as to new fresh eyes would see the below, and established eyes are naïve. 

Use these 25.5-LESSONS from my personal work with Fortune 100 Firms, Government Agencies and Private Sector Businesses ranging in annual revenues of $10 Million-Dollars to more than $6 Billion-Dollars, as a check-list before entering your next merger or alliance: 

1. Lesson – Values. Do “You” and the “Other Parties” involved in the intended new alliance/merger 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! 

   And if all parties say they have shared Values, make sure you look under the hood for examples to prove it!

2. Lesson – Want. 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 – Equal. Before entering into any new alliance, determine if all Parties are equally vested in future success. Is there really a Common Cause/Common Purpose? 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 – Emotion. 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 – Credentials. 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 (outside Board members, Shareholders, Attorneys, CPA, Investors, etc.) 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 – Financials. 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 – Certified Financials. 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 – Buyer Beware Legalities. Search online for Government and County public records to see if there are pending or past litigation, liens, settlements, court judgements, bankruptcies, etc. with the other Party(s). And here are some examples of where you better be searching, that I would have never realized. 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)
   – The County (zip code) where the other Party’s Law-Firm-of-Record operates (if different than previous locations)
   – The County (zip code) where the other Party’s Owners operates or lives (if different than previous locations)
   – Where will the new merged entity by located and legally registered, WHY 

   Make sure you cross-reference every possibility. “Trust yet verifies,” 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!If any pop-up item can be professionally explained, then proceed accordingly.

9. Lesson – Outside Financials. Review the companies’ financials and connect with all major Vendors, Suppliers, Partners, Outsourced Agencies, etc. that are listed on their AP ledger, to ensure you understand from their lens, what they say about your new business intentions and the key personalities involved. Talk to their major suppliers and customers in advance about their perceptions of the potential Merger and more so what their real standing relationship is with the other side?
10. Lesson – Human Capital Talent Optics. 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, go back several years in this evaluation. 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?What is the developmental pathway for each individual’s journey to keep them fully engaged, retention.

11. Lesson – Critical DNA. With the Human Capital Talent pool, who are deemed as critical to keep if you do go through with this merger? What promises have been made to these individuals and then make sure you go one-on-one for their views and you’re understanding.
12. 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, religious views, politics or social-causes as a dominant public placard, RUN! 

    In 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 you’re 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.

13. Lesson – Taxes. 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! 

    The new merged entity, who will manage the AR and AP? How do you know what is really happening in real time, to ensure that there are not two sets of books?

14. Lesson – Secrets. 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. Always remember, how key people talk to you when others are not around, may be exactly how they talk to others about you, when you are not around … Time for a significant conversation or immediate CYA and exit strategy deployment! 
15. LESSON – Retirement. 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.

16. Lesson – In Writing. Everything must be put in writing before the merger (marriage) and YES consider your Exit Ramp before you access the on-ramp to this merged relationship.
17. Lesson – Money & Cash Flows. Make sure you ask the obvious, “how does the business make its’ money?” And, for every SBU how does it makes it money? Then ask and review financials to ensure it is reality. Make sure that there isn’t behind the scenes investment money at the time you are considering to merge, that is actually paying to keep the business going. 

    And, while we are on the topic of money and finances. Who is bring what money to the relationship, what are their expectations, is hat in writing and how do you know either side won’t just quit or demand because the are in essence the banker, that everyone must play by their rules?

18. Lesson – Deliverables. Look at the deliverables of the business you are about to merge into and ask, are we exclusive in the market, does the company own their Intellectual Property or Deliverable? What is the competition? What percentage of the market is market share and what are their answers to where is the market potential? What are the businesses deliverable streams for the next 1,3, 5, 10 years? 
19. Lesson – Resources. Are there Supply Chain realities impacted by the merger and the post-merger business and how are or could they impact the new future business?
20. Lesson – Go Forward Plans. What is the Capital Improvement plans without the merger and or post the merger?
21. Lesson – Accountability Partners. Who are the key accountability players or decisions makers in the new merged entity. If there will be a Board-of-Directors (BOD), who are the personalities and can you trust them, work with them, serve them? How will they engage and treat your post-merger? And, what are the views and motives around the merger? What are their Values and expectations from You, all other senior leaders and key employees’ post-merger? What are their expectations from the business and core deliverables of the today post-merger and future growth expectations?
22. Lesson – Accountability Matters. Who owns what decisions in the merger, are there clear Job/Position Statements for lane management, and does everyone really understand what Tasks, Duties, Responsibilities (TDR) each will have post-merger? And once defined, does the human capital that will populate these roles have the elementary Knowledge, Skills and Abilities (KSA) to execute? What will be the evolving TDRs and thus what will be the necessary KSA to survive, thrive and be relevant in the post-merger economy?
23. Lesson – Legacy. Are there any legacies issues you must be aware if the merger goes through and how can they be addressed before, during and after the merger? Think of …-
    – Employees
    – Deliverables
    – Systems
    – Processes
    – Clients
    – Vendors and Suppliers
    – Family Members
    – Pet Projects
    – Etc.
24. Lesson – Exit Strategy. 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! 

    And, this could be also what are all parties exit expectations, needs, time lines. No threat here nor negatives, make sure you have reflected on when, where and why it would be time for you to exit in great terms? Ask that of all other merged partners, what do the want in the end?

25. Lesson – Why. And, so we end where most people start. The WHY. Make sure the WHY for YOU and then everyone else is clear and makes sense. Once you consider these Business Development & Leadership vetting questions, if the WHY is still loud, launch forward.

And, here is the platinum bullet …

25.5 Lesson – Track the Signatures. If the merger creates a new entity to be registered with a States, Secretary-of-State, YOU WANT TO BE THE LAST SIGNATURE of Owners to touch the new Articles of Incorporation and you want to be involved in submitting them. Once submitted, make sure that what the Secretary-of-State shows as the Owners is what you believed to be true!

No one would have ever suspected, I have heard people say that and I have heard that internal voice in my head start to beat me up, more times than should be reality … 

Being naïve and over trusting will implode You and any merger in the end. That is why in any Merger it is mission critical to have your own vested C-Level Coach/Advisor in your camp through the entire life cycle. And, oh, here’s a clue, vet your Coach/Advisor as well, if their LinkedIn resume shows they have never signed payroll or have changed jobs every two-years of their life, and if they can’t immediately produce references from their smart phone directory to you – run! 

We learn from our wounds and business never gives up … There is another side, and that is MERGERS in many instances, create something bigger, better and with more opportunities for everyone for greater sustainability. The right merger of talent, vision, values, energy, passion and hope can elevate WINS to heights that would have been unattainable elsewise!

Written by Dr. Jeffrey Magee.
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