Merging your business with another can seem very attractive for all sorts of reasons: funding; shared resources, including people and premises; the two heads syndrome, and the general ?we are not alone anymore feeling.
But like many marriages you don’t really know what it’s going to be like until you actually start living together, however great the dating period was, however long the union was in coming together, the real test of a marriage or a merger is, “Will we be able to make this work on a day to day basis?”
Part of the problem is that it’s rarely an equal merger. In truth, there is rarely a case where both parties are equal, even if they start off in that belief by and large. Someone will have always known they were the more dominant player or have quickly come to that conclusion.
In marriage, it’s give and take and an understanding of the differences that make things work. It’s undoubtedly the same in business, but the further complication is that instead of two people trying to make it work, there are many people involved in a corporate situation, all with their own agendas and personalities.
Lots of issues can be predicted as problem areas: IT systems always being a major issue, finances pay levels and expense allowances, reporting processors, marketing spend and focus to mention a few, but it’s probably not these that will cause the break up though they may add to the melee.
Back in the domestic world of mergers, problems arise from the fact that he leaves the toothpaste top off every single day or the fact that she won’t stop nagging him about it that seals the final death knell. In business it’s usually perceived to be little matters that stop the joint venture working. Largely, this is a cultural issue, if there has been a minnow in the deal it’s very likely they will be less formal, perhaps in something as simple as dress or attitude. The smaller party may well have a very different attitude to staff management and motivation, and it will be all these initially seemingly less relevant behaviours that start the divorce process.
In my own experience, being the minnow, it was issues I had subconsciously known would be difficult, but persuaded myself that it wouldn’t matter. Like the weeks or months to make what I perceived to be a quick decision, the banal formality of half yearly appraisals – which were no more than a box ticking exercise – the absolute disregard for understanding and listening to the staff issues in such a way that they knew you really really did care about them, and the ludicrous back covering and back stabbing behaviour of most of the senior team.
In marriage, whether any of this is preventable or manageable depends on the people at the party; those that do seem to succeed have a give and take attitude and an ability to know when to compromise and when to fight. They are best friends and lovers and know when to forgive.
For a business marriage to work the parties need to be honest quickly, when things aren’t working be prepared to try alternatives and seek help. The marriage councillor in a domestic situation being replaced by say a good independent NED.
They also need to give things time. I would happily have divorced my husband several times in the first few years we were together, and I am certain he felt the same, but 20 years plus on we are probably the happiest we have ever been as we have learnt what works and what doesn’t, what will wind the other up and what’s acceptable. To be fair, we are also probably more tolerant than ever.
Similarly, in business, don’t give up at the first hurdle, talk it through and try alternatives, don’t smoulder and fume. Okay, so ultimately it may be irretrievably broken, in which case a swift exit is always the least painful. If your plan involves annihilation of the other then all I can say is best of luck – that’s a poor strategy in the end.
Jo Haigh is head of FDS corporate finance services and the author of ‘The Financial Times Guide to Finance for Non Financial Managers’.