Situation: The Company is losing money and has been approached about a merger. The CEO’s ideal outcome would be to get cash on the table, integrate with the merger partner and continue business. The other alternative – downsizing – may hurt company morale. What are the best options available?
Advice from the CEOs:
- The realities of mergers:
- 70% of mergers fail, and the merger process often leaves founders with a minority stake in the company.
- Experience of others with partners has been disappointing – better to control your own destiny.
- Look at all alternatives before you jump into a merger. You founded the company and have brought it this far. The company will be a different company following a merger, and not the company that you founded or have led to date.
- Message to your potential merger partner:
- Be a reluctant bride.
- “We are making improvements to return to profitability and I’ve joined a board of CEOs who are consulting me through the process.”
- If the partner sweetens the offer to keep the merger on the table, make sure that you get 51% of the merged company and retain control of your own fate.
- Reconsider downsizing – Others have found the downsizing experience wrenching, but with far more positive results than they expected.
- More on this in the next ceo2ceos blog.
- Summary: look more closely at your situation before your jump into a merger. If you can save expenses, return to profitability and stay independent you will be happier.
Key Words: Merger, Negotiation, Ownership, Downsizing, Mitigation, Layoffs, Profitability