Monday, November 10th, 2014

Rarely Is It A Merger

I have a lot of random thoughts about mergers/acquisitions, I lived through about 5 of them (acquisitions).

In the CPA firm world, we almost always call them mergers when actually they are acquisitions. There is a dominant player and I think there should be. Trying to please everyone creates chaos. So, the acquiring firm, should clearly explain and communicate the expectations up front and the firm being acquired should air any concerns and negotiate, up front. It doesn’t have to be an argument… think negotiation and communication over and over again.

Some partners are strongly against being acquired. It is usually the poor performing partners because they fear that they might… just might be held accountable and might not live up to the expectations of the new entity.

Mergers/acquisitions are the way to go if you want to grow rapidly or if you want to cash in your chips. I like to see mergers be structured as a win-win and they can be (even if it is really an acquisition).

Here’s a story I heard from a large firm partner many years ago about Bob, the long-time managing partner of a smaller firm.

Bob (this was back in the old days) had a button on his desk that he would push to summon his secretary. He usually pushed it when he wanted something specific done or wanted her to summon someone to his office. Of course, the employees joked about the button and always dreaded it when Bob “pushed his button.”

After being acquired by a large firm, Bob agreed to continue working for a couple of years for transition purposes.  The larger firm managing partner (Tom) found Bob very challenging. Bob continued to push his button to convey his wishes to others.

One day Bob’s button disappeared. Bob immediately went Tom and asked in a demanding tone, “What happened to my button?!” Tom simply replied, “Bob, you sold your button.”

So, if you are being acquired by a larger firm – you are selling your button. That doesn’t mean it is a bad thing. It means you will have to change in some ways. Probably in ways you should have changed several years ago.

  • "If you wait, all that happens is you get older."
  • Larry McMurtry

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