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Finding That Perfect Match

Regardless of the goal of a merger, first and foremost there must be the right chemistry between the firms. Culture and firm personality must be almost parallel with one another for a merger to work. They must also be able to offer clients and staff reasonable continuity to ensure retention.

CULTURE. Culture can include employee benefits, vacation policies, dress codes, IT, recordkeeping, organization and communication. Critical steps include reviewing a firm's employee handbook, work charts or guidelines and also to ask probing questions.

EGOS. Egos will play a significant part in the merger process. Egos will have an impact on the name of the new firm, the titles, the order of the names on the letterhead, compensation, office accommodations and, most importantly, control. This is a natural occurrence but the question that must be asked constantly is, "What is the business case for any decision?" If ego can increase billing rates, bring in new business or enhance profitability, great. If it cannot, make a business decision.

SYNERGY. Synergy and opportunity must be identified and analyzed. A merger of clones produces mass. Mass does not necessarily translate into growth or higher profit. This is exactly why it is important to understand different is not a bad thing, it is just different!

BILLING. Billing rates must be analyzed. Very few firms charge the same hourly or project rate because many firms make internal decisions regarding what services are included in a particular fee rate. Billing rates are important but realization rates even more so. If in fact, two firms do have significantly different billing rates it's important to evaluate what level of staff can perform the work being billed. Often a manager or other level can perform the work previously done by a partner of the merged firm.

GOALS. Goals of each firm must be analyzed to ascertain if each will be met. If your firm is merging for purposes of succession and the partners of the other firm are similar in age or just a few years younger, this is a merger that probably will not work well. If a firm is looking to merge for purposes of cross-selling their audit services and the firm being considered does not have clients needing audits, the benefits of the merger may not be fully realized.

POLICIES. Policies and procedures must be compared as they contribute to a firm's culture. Firms with vastly different procedures or processes may not match well for purposes of a merger.

No firm is a perfect clone of another, so often there will be differences and the need to make changes. The deciding question must be: Will making that change alter the firm's personality or culture? If the answer is yes, then do not go into a merger unless you and your staff are ready to accept this cultural change wholeheartedly!

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