Overview of common merger mistakes

On Behalf of | Apr 15, 2021 | Business Formation |

Business formation and planning in New York is a challenging endeavor. This includes not only the initial organization of an enterprise but such further undertakings as contemplating and completing a merger. Business owners need to be aware of typical merger mistakes that are made with alarming frequency.

Misgauging purported strategic fit

Perhaps the most commonplace and oftentimes fatal merger mistake is misgauging or misunderstanding the purported strategic fit thought to exist between entities. Businesses that do not have a commonality in their core competencies can end up with a merged enterprise that is next to impossible if not actually impossible to effectively manage and operate.

Pre-merger and post-merger communication collapse

As with so many things in the proverbial business world, and like more generally, when it comes to business formation and planning, including in a merger setting, communication is fundamental. One of the frequently occurring types of mistakes is found in pre-merger and post-merger communication collapse. Transparency and strategic coordination are destroyed when communication falters. With that said, unlike misunderstanding what was thought to be a perceived strategic fit between merger partners, communication issues many times can be corrected.

Merging for the sake of merging

Two otherwise healthy companies end up in a merger morass because they united for no real, meaningful purpose. Simply, merging for the sake of merging can prove to be a dangerous dilemma for businesses. Entrepreneurs with thriving businesses sometimes adopt the mindset that their visions can be broadened and enhanced by merging their venture with another without having specific strategic objectives for doing so.

When it comes to business formation and planning as well as considering and planning a merger, competent legal guidance is a must. A skilled, experienced business law attorney with a background in mergers may be able to help prevent these mistakes.