Q: My agency and another agency are considering a
full merger. What are the issues that we need to address together
before we go ahead?
A: Here is a checklist of 20 issues that you
need to address and resolve with your merger partner:
1. If either party has any major clients that were former
clients of the other party's, how will they react to the
merger?
2. Are fee-based pricing and service fee policies
compatible?
3. Are account-management policies and structures
compatible?
4. How will combined market shares affect override payments?
5. Are there new opportunities for enhanced supplier
relationships?
6. Will any CRS contract ratio requirements be affected if your
partner has a different CRS?
7. Are salary scales and benefits reasonably compatible?
8. Which employees and departments could be eliminated to
achieve economies of scale?
9. What will the new organizational chart look like?
10. Who will be chairman, president, chief executive officer,
etc.?
11. What will be the plan of succession?
12. Who will serve on the board of directors?
13. How will each party's stock ownership be determined (e.g.,
relative profits, sales, revenues or a combination)?
14. How will you decide what expenses ought to be added back
into profits?
15. What if one party wants to buy out the other or be bought
out?
16. Should the new name be just one party's name, a combined
name or an entirely new name?
17. Are work styles, values and expectations reasonably
similar?
18. Are policies regarding who gets a secretary and which
offices get a receptionist compatible?
19. Even though the merger itself is tax-free, what tax
ramifications will there be later on?
20. What will happen to each party's profit-sharing plans?
Once you have answered these 20 questions, you will be ready to
merge.
Mark Pestronk is a Fairfax, Va.-based attorney specializing
in travel law. He answers your questions in the Crossroads' Legal Issues Forum.