What do a marriage and a merger have in common?

Both need commitment and much more. That's my first reaction after reading some recent posts. Before you throw any bricks, shoes, or eggs (not yours but those from a hen) to me, let me give you a comparison between the two terms- Marriage and Merger – and lessons learned therefrom.

Marriage is the state of being a married couple voluntarily joined for life (or until divorce), a social, religious, spiritual, or legal union of individuals. Merger, on the other hand, is the fusion of two or more corporations by the transfer of all property to a single corporation. On the surface, the two actions are a world apart. But upon closer inspection, you would be amazed at how similar and related they are!

For instance, both are about a union that puts two independent entities under a single ownership. Both have important consequence to the parties involved in the years to come, for the purposes of creating something of value, be it a wonderful child or a popular product. Both require legal approval of some sort. Both incur thorough studies and negotiations beforehand, compromise and integration afterwards. It is the last part – from initial study to final integration - that I want to dwell upon in this post.

1. The buzz that makes your head spin.
A potential marriage or merger would get two parties excited. It is the synergy of the union that attracts both. Synergy, in turn, may stem from their commonalities or differences, or both. A common mistake made is that one party is blind-sighted by the potential happiness and pays less attention to the fundamentals of the business that matters. The result of such oversight is dire: divorce or collapse of the new union. In the real world the choice between “love at first sight” and “marry who is available” constantly produce drama, headache, highs and lows for the whole world to watch. Is there a roadmap for success then?

2. The research that might save the day.
Do your homework. The process starts with preliminary assessment to identify the ideal target (dating candidate). You either browse thousands of profiles (on Match.com) or hire a consulting firm (a personal matchmaker) to do the leg work for you. Don’t be fooled by a candidate’s sexy looks (or organs). It’s only skin deep anyway. What is the key quality you are looking for? Do you look for a partner who is similar to or different from you? With a clear picture of your ideal match, you can probe targets of interest by experimenting with initial non-binding offer and hints of interest (dating). Read those non-confidential disclosures and exchanging communication messages carefully to get a rough idea about each target’s sincerity and characters. Competition is welcome during this period to weed out those guys who only flirt with everyone without much commitment to any. Needless to say that this is the stage at which you try to understand your potential target better. You definitely have to set rules for things you can and cannot tolerate in your partner’s part so that neither party will waste its time in the process.

3. Due diligence is the key.
Once the initial screen produced a standout candidate, send in a due diligence request (such as upgrading from friends to lovers). This provides an opportunity for both parties to show their true face and to test their commitment to each other. Many seemingly trivial incidents can derail the whole relationship due to subtle differences in culture and communication. So can freshly discovered important issues such as prior debts and future obligations. It all boils down to the commitment for the relationship and the level of tolerance for the other party to behave after the union. If both parties want to walk down the path together, each one has to make some sacrifice along the way and purge out some bad assets to fund new, joint initiatives. Market blackout for both parties are a must to comply with securities law (or the exclusiveness nature of the relationship). Those who are still secretly seeing other candidates would risk not only putting a bad taste in mouth of its counterpart, but also jeopardizing the whole deal in the end.

4. Definitive agreement negotiation after sending proposal.
In marriage this is done in a dramatic fashion, including but not limited to choosing a romantic occasion to propose,  buying one of the hardest mineral, or signing a prenup agreement. In the business setting, this is pretty mundane: just pay attention to detail and follow existing protocols.

5. Integration and celebration.
Definitely there are people who plan the wedding well rather than the marriage. I hope you are NOT falling into that category. Signing ceremony (or the wedding) is a formal ceremony full of promises. Witnesses are invited and vows are exchange. What happens next is more important than the exciting and memorable ceremony. Suddenly one realizes that instead of marrying one person, he or she marries the whole family. Collisions and conflicts are around every corner since day one. In essence, the presence or absence of disagreement is not as critical to future performance as is the manner in which each disagreement is addressed. Be realistic. Every relationship needs time beyond the honey moon to evolve into what has been envisioned to be. Both parties have to make compromises and establish mutual trust to go down the long road of success together. Keep the communication channel open and uncluttered. Remember, perception is everything - well almost everything. The way how you interact with your partner, especially during crisis, reveals far more truth about your relationship than kisses and hugs (or PG 13 actions). If this is an important investment to you, make sure you put down your bet with sincerity for the long term.

Finally, let me point out the biggest difference between a marriage and a merger.  The former is based on love and the latter is based on (conceived) profitability.  A lot of mergers left destructive trails like hurricanes!  To me the question naturally becomes "why so many mergers went bad?" Or "why does the party being taken over succumb to such a deal/ordeal?" We all hate the dark side of business and maybe we should start to teach executives how to nurture "affection" between enterprises. Years ago no one cared about the environment or the green house gas production. Look at what is happening around us now. Business, like love, needs time to adjust to the changing world.  Walking down a beaten path leading to destruction is not a wise decision in either the business world or the emotional one.  Let true love save and rule the world!