Company mergers are often complicated arrangements with huge implications for all of the involved parties. As the merging companies begin to put the details together, there are three major pitfalls to avoid prior to closing the deal.

1. Being too helpful

When providing information to the potential buyer, the seller should keep some information to themselves. Primarily this is referring to their processes, strategies, and intellectual property. At this point, they are still a competitor and could use this information without purchasing the company. Provide only the necessary and requested information.

1. Celebrating early

Until every contract is agreed upon and signed, it’s a good idea not to spread the news and start celebrating. There are endless reasons for deals to fall through. Keep the information on a need-to-know basis. Partners, finance directors, and the board of directors should be in-the-know. Everyone else should wait until the deal is sealed. Employees who hear rumors of potential mergers and company sales may begin to panic about their positions and jump ship. Losing key employees could ultimately disrupt the entire merger or sale.

1. Not Staying Involved

Although it may be tempting to cut back on sales and production efforts in anticipation of the merger, it’s important to maintain focus and continue to operate the business as usual. Otherwise, if the merger doesn’t go as planned, it could take months to get the business back up to speed. It will be a busy time focusing on the operational side of the business while also working on the details of the merger. This is the perfect time to enlist the services of an in-house attorney to carry part of the load for managing the details of the merger agreement. This allows the company leadership team to focus on their primary responsibilities and providing the additional information necessary for the merger.

Mergers can and should be beneficial to both parties and InnovaCounsel can keep the process moving along as smoothly as possible. Having an in-house attorney review the buyer’s Letter of Intent and other merger documents can eliminate possible issues. The attorney can also advise their clients as to what information and processes are normal and customary to avoid sharing too much or too little information.