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The Do’s and Don’ts of Merging Limousine Businesses

Last updated on June 25, 2011 by Sozo Staff

A merger is kind of like a marriage. Ideally, the two parties will reinforce each other’s strengths while improving each other’s weaknesses, creating a single bond stronger than its individual parts. Just like with matrimony, however, it doesn’t always work out. Hurrying into a merger before you and your partner get to know each other can lead to an unhappy union and, potentially, a messy split. If you’re thinking of merging limousine businesses, here are some do’s and don’ts to consider.

Do agree on value

Owners may vow to consider each other equals, but the reality is that no two businesses are alike. Value is a major deciding factor when determining ownership share in the new entity. It’s natural for business owners to overestimate their company’s worth. Your business partner may come to the table with a value that seems outrageous to you, but then scoff at the number you provide for your own company. In this case, the services of a third party industry expert can reduce tensions and offer a neutral opinion.

Do maintain excellent communication

In a merger, both owners need to be transparent when presenting facts about value. You don’t want to be impossibly optimistic when projecting future earnings and then fall short, especially when you have to face your business partner every day. When a merger is complete, it’s important to reassure employees and clients and work together with the new owner to provide a united front. Of course, there can be such a thing as too much communication. Confidentiality breaches during merger talks can lead to nervous employees and customers at a time when consistency is key. A professional broker will ensure sensitive information stays private.

Do join forces with a company that has complementary strengths

From ordering equipment at a reduced rate to eliminating competitors from the playing field, economies of scale are one of the most obvious advantages of mergers. But keep in mind that larger companies may also have trouble adjusting quickly to the market. A merger between similar limousine businesses may suffer if, say, clients cut back on luxury transportation during an economic downturn. However, if one of the two companies brings a different asset to the table – such as a motorcoach fleet used for group tours– the diversification may help insulate against market fluctuations while providing customers with more options.

Don’t forget to consider company culture

Often times, business owners look at assets and earnings, but fail to consider day-to-day operations. You don’t have to agree on religion and politics, but it helps when businesses share a similar operating philosophy. If one partner requires drivers to wear tuxedos while the other lets employees show up for work in jeans and collared shirts, somebody’s policy is going to have to change – and it may cause a struggle. If you can see yourself wasting time with a culture clash, maybe it’s time to look at the other fish in the sea.

Don’t lose focus

When you make plans to merge with another company, it will understandably be a source of some distraction. But completely neglecting to take care of business, from maintaining client relationships to making good on loan payments, can drive down value and delay – or eliminate – a potentially successful merger. Customer loss is often an unintended side effect of even the most successful mergers. More than ever, providing consistent service is vital when considering a major business change.

Filed Under: Transportation

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