Accounting firms shouldn't think that there isn't a cost to a merger that doesn't happen -- or worse, one that falls apart -- lawyer and M&A expert Steven Berger told attendees at Accounting Today's 3rd Annual Growth & Profitability Summit, which took place Oct. 28-30 in Boca Raton, Fla.

Berger, a shareholder at law firm Vedder Price PC, which has a strong focus on working with CPA firms, particularly in the area of mergers and acquisitions, spoke about the pitfalls of deals that fall apart at different stages as part of a session called "Making Mergers Work."

"Mergers are very risky," he said. "The downside of a merger that happens that doesn't work are some pretty high costs. There are fees, obviously, but there are moral and emotional costs, too."

The price of a merger that fails after being completed can include:

• Assets you can't use, such as real estate or hardware that was leased or purchased in anticipation of a larger firm;
• Receivables that you can't collect, as the partners who generated them go their own way;
• Defecting clients who choose to stay with departing partners;
• Damage to the firm's reputation;
• The loss of professional fees, such as those paid to lawyers and bankers; and,
• The loss of the time management spent arranging the merger.

"Sometimes firms don't recover from this," Berger warned. And those that do, he added, may suddenly see themselves in play as a possible acquisition target: "Other firms may see you as weak."

These significant dangers are just one of the reasons that Berger stressed the need for firms to plan their merger strategy well in advance, and execute it extremely carefully.