Las Vegas (Jan. 14, 2004) -- While mergers and acquisitions are expected to heat up in 2004, firms pursuing M&A as a primary growth strategy need to adhere to a strict set of criteria to avoid adding a headache in lieu of a bona-fide revenue enhancer, a managing partner advised.
Tom Marino, managing partner of regional powerhouse J.H. Cohn, of Roseland, N.J., told attendees at the Winning Is Everything Conference, here, that his firm had executed 12 M&A deals since 1996, which has boosted firm volume 500 percent, with average partner compensation rising 173 percent.
J.H. Cohn executed two large mergers over the last year with interstate competitor The Videre Group and New York-based Mason & Co. While mergers can add new niches and areas of expertise your firm may not have had before, Marino advised firms not to rush into deals, as there are a number of issues that have to be resolved before heading to the altar.
“You have to decide, are you a buyer or are you the seller?” said Marino. “You have to be open and candid at your first meeting. Quickly identify any potential deal-breakers. For instance, we won’t do a deal if a firm is in trouble. We’re not anyone’s savior. If a firm doesn’t have enough rainmakers we won’t do the deal either.”
Marino recounted that during one merger, employee parking surfaced as an issue. “Find out if the cultures are different,” he said. “That can be done in a professional conversation or even socially over a beer.”
And during the first year of a union, Marino told attendees to forget about the deal bearing fruit in the form of profits. He noted that it usually takes two years before most mergers help boost the bottom line. Marino advised M&A-minded firms to determine if new job titles are necessary following the deal, and warned that succession will always be an issue in a merger.
Said Marino, “Remember, the transaction is not complete until the transition is complete.”
-- William Carlino
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