Merger Process and Mistakes
Mergers and acquisitions can be complex undertakings filled with potential pitfalls. As experienced M&A attorneys in Philadelphia, the legal team at Davis Bucco & Makara regularly guides clients through the merger process. We have seen firsthand how costly oversights can derail these major business deals.
Our team of corporate lawyers has 35+ years of experience in corporate and business law. Call Davis Bucco & Makara today at 610-238-0880 for more information.
To help ensure your upcoming merger goes smoothly, below are 7 key mistakes to avoid. It is important to consult a lawyer for mergers and acquisitions before proceeding with a merger.
1. Failing to Perform Comprehensive Due Diligence
Thorough due diligence is crucial for understanding exactly what you are getting into. Financial, legal, tax, HR, environmental, and other assessments should leave no stone unturned. Surprises after the fact can completely change the value proposition and financial modeling behind the deal.
2. Not Developing a Realistic Integration Plan
The success of a merger largely hinges on how well the combined companies integrate. Developing a clear integration roadmap aligns all teams and prevents disconnected efforts. It also ensures proper resource allocation for carving out the new organization. This is where a merger lawyer in Philadelphia can help support, they are knowledgeable about the integration process.
3. Neglecting Culture Compatibility
Culture clashes routinely sink mergers. Evaluate the degree of alignment between the two company cultures early on. Look at policies, values, work styles, management approaches, and other elements that shape the environment. Address any significant differences in the merger integration plan.
4. Failing to Retain Key Staff
Your company's top talents are prime targets for poaching during uncertain times. To retain institutional knowledge and leadership, clearly communicate job security details and new opportunities. Outline incentives to remain, and highlight the upside of the deal.
5. Not Involving an Experienced Mergers Attorney
Legal oversight is mandatory during M&A deals, especially for publicly traded companies. Merger attorneys help value entities, perform due diligence, assess risk, negotiate terms, and ensure SEC compliance. They also interface with financial advisors, management consultants, accountants and other professionals.
6. Sacrificing Due Process to Meet Deadlines
Rushing through due diligence or contract finalization can cause major issues later on. Build reasonable buffers into your timeline, and don't let deal fever push you into cutting corners. Also beware of confirmation bias blinding you to red flags as closure nears.
7. Failing to Think Through Non-Compete Clauses
Non-compete agreements aim to prevent merger partners from competing against each other's core business for a set period of time. However, overly broad non-competes can significantly hamper flexibility and innovation post-close. Consult an experienced merger attorney on creating reasonable non-competes tailored to your situation.
Frequently Asked Questions
1. What percentage of mergers fail?
Studies show that between 70% and 90% of mergers and acquisitions fail to create their expected value. Reasons range from lack of strategic alignment to poor integration execution.
2. How long does a typical merger take?
While timelines vary substantially based on factors like complexity and regulatory reviews, an average merger takes between 6 and 18 months from initial talks through final integration.
3. Can a merger be reversed once shareholder approval is obtained?
Yes, it is possible to terminate a merger post-shareholder approval if certain material adverse changes occur. Breakup fees often apply as stipulated in the merger agreement.
4. Who should I involve in a merger process?
You need experienced M&A legal counsel, investment bankers, integration consultants, financial advisors, accountants, IT specialists, HR consultants, public relations strategists and senior leadership closely involved.
Finding a Corporate Lawyer for Your Merger and Acquisition
The seasoned corporate attorneys at Davis Bucco & Makara provide practical guidance at every stage of the M&A process. Rely on our experience to steer your deal towards maximum profit and long-term success. Call today at 610-238-0880 for more information.