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Premerger: Starting Off Right, Right From the Start


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Mini Case Study of a Premerger Facilitation

We enjoy doing pre-merger facilitations because generally those involved are full of optimism and are looking for ways to make sure they start off strong.  In one recent case where two sole practitioners were merging, we helped the two potential partners examine partnership issues before they formally merged.

Erik and Alice are each very successful sole practitioners.   They have known each other a long time and frequently meet up at local networking events.  They have even collaborated on a joint client and pitched a very big client together.  So, when each had started thinking about the benefits of being in a partnership, they naturally thought of each other as potential matches.

Erik thought that Alice was “very professional and had demonstrated prior success.”  Alice respected Erik’s “intellect and client service model.”  They had been pursuing different “model clients” but both offered similar services.  But until now, each had been securing and serving clients on their own. How would they transition from being the single point of success/failure for their business to a true collaboration that captures all the benefits of being in an ensemble?

We provided Alice and Erik with psychometric testing and a facilitated discussion of partnership issues. This allowed them to consider and test potential problems in their partnership before there were any conflicts, while they were still in the honeymoon phase of their merger.

WHAT WAS POSITIVE:  The assessments revealed that they both had a cooperative and collaborative style. This bodes extremely well for the decisions they will make as they build this new business and allows them to work together for the benefits of their new joint clients.   They agreed that things work best when information is shared early, and they both look forward to getting feedback from each other on proposals and client solutions.

During the meeting, the expectations of timelines were made fully explicit.  While Erik wants to retire in 10 years, Alice wants to have the option of retiring at that time or continuing.   This information will form the basis of their future discussions and clarify their goals before meeting with their attorneys.  All decisions they make together will be in light of this shared information. 

WHAT THEY HAD TO LOOK OUT FOR:  Both Erik and Alice are gregarious and people-oriented.  Since they enjoy talking and socializing so much, there is the possibility that they will not be as efficient with their joint time together.  We recommend regular scheduled times to discuss the business, but with agendas and time limits. 

Erik scored high in steadiness – he takes his time in making decisions.  Alice likes to decide quickly.  Now that they know this about each other (and they agreed that this was accurate) they can take that into account instead of getting frustrated with each other’s respective styles.   One way to handle this is to agree that decisions would not be made at the meeting where the issue was raised, but at the same time to  have a process for getting decisions made on a timeline.

Alice scored high in the ability to learn and follow rules, and is naturally detail-oriented.  This lead Erik to assume that Alice would take over billing and bookkeeping, a hated chore.  Alice pointed out that she may be good at these tasks, but she did not love them.  This lead to a discussion of other tasks that had to be divided up and also an acknowledgement that perhaps some tasks had to be outsourced for everyone to be satisfied. 

They were both committed to having a 50/50 split though their current capital and cash flows were unequal. It was clear they needed more discussion around how this inequity may play out over time and what the expectations were in building the combined business.  We provided them with tools to look at the contributions to the partnership in new ways.

As we prepared the summary of their discussions, we felt that this partnership was off to a great start, not the least because they had devoted time and space to its success, and came away knowing the communication styles and decisions making preferences of their new partner.

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