Merging your accounting firm with another business is a large undertaking, and can be profitable if you play your cards right. But merging two companies involves more than just an agreement between two business owners. To get the most out of a merger deal, you need to consider your office space and location, your existing client base, the type of merger you’re after, and your plans for the future of your company.
Preparing Your Space for a Merger
When you’re contemplating a merger, you want to make your business space look attractive to potential new partners. It might not seem so important, but having new (or at least well-maintained) furniture and an overall clean and pleasant atmosphere says a lot about your company’s practices. A visually pleasing office shows you care about your employees, and are willing to invest in new equipment and furniture to keep your business running well. An outdated, dusty-looking space can indicate the opposite. Even if you don’t plan on keeping the same office once you merge, be aware of how your office space is going to affect people’s opinions of your company.
Of course, depending on the nature of your merger, you may not stay in the same place after the deal is complete. One option is simply moving to a larger space. If you’re considering a move, think about the costs involved and the type of space you’re going to need. Finding a large office space for lease and moving from from an existing office to a new one can be a lengthy process, so get everyone on board as quickly as possible.
Just like in a business expansion, you might also consider opening a new location. Maybe you and your merging firm’s existing locations can become two separate locations for your combined business. If so, how are you going to divide up the duties of leadership between yourself and your partners?
Preparing Employees and Clients for a Merger
A merger isn’t just a matter of a handshake and a signed contract. Everyone in your company, even entry-level employees and interns, is going to be affected by your decision to merge. Before you broach the subject with employees or clients, take some time to clarify and articulate your reasons for wanting the merge. Maybe you feel you can serve your clients better by merging with a company that offers different services in the same industry. Perhaps you want to expand your client portfolio by joining forces with another major accounting firm.
Taking adequate time to discuss a proposed merger with your employees, and to hear out their questions and concerns, can help you retain existing employees during and after the merge. Keeping most of the same personnel can make the transition smoother for everyone.
The same goes for your clients. Maintaining client relationships after a merger is a major consideration with any deal, and the type of merger can often affect your clients’ decisions to stay or go. While you may be inclined to turn your focus toward more recently acquired clients, whose relationships with your business are still developing, make sure you don’t neglect your oldest clients. Older clients with whom you’ve developed a tight working relationship may be more likely to jump ship if the merger doesn’t work in their favour. If your merger puts a decades-old client at a disadvantage, that client might interpret the deal as a breach of trust, or a sign you no longer care about keeping its business.
To avoid this pitfall, discuss all the potential merger options with your clients well in advance of any actual merger proceedings. Not all conflicts can be avoided, but taking the time to address and understand concerns can mitigate client dissatisfaction, and help your clients feel like they’ll be supported throughout the transition.
Choosing a Merger Type
Before you dive into a merger, understand what kind of deal you’re looking for, and how it will affect you and your clients. There are three commonly recognized merger styles:
- Horizontal merger: two companies in the same industry that provide the same service
- Vertical merger: two companies in the same industry that provide different services
- Concentric merger: two companies in different industries that provide different services to the same clients
The merger style you choose will have a big effect on your business style and the scope of your client portfolio. For example, if your main goal is to keep as many existing clients as possible, a vertical merger might be your best option. Maybe you specialize in business income tax, and you want to join with a company that specializes in grants and loans. The merger can make things easier for your existing clients by providing them with a sort of one-stop-shop for all their business needs.
Succession Planning and Mergers
Do you have a succession plan for your accounting firm? If you already do, you need to think about how a merger is going to affect that plan, and whether you need to make any changes. If you don’t yet have a succession plan but are planning a merger, you can develop a succession plan alongside merger proceedings.
A succession plan may begin with a merger, when you and another company merge to form a new business. Perhaps the merging firm is owned by someone you trust to take up the helm of your own company when you choose to retire, and you want to get them on board as early as possible. Merging with a successor’s existing business is a great way to expand your business while preparing a successor for an eventual leadership role.
Try to consider all the possibilities when planning a merger. Pay special attention to your clients and employees, and do your best to find a merger situation that helps you preserve the greatest things about your current business.