When two businesses become one

Doug Schmor likens the merger and acquisition process to a love story.

"In the beginning there is desire, followed by the first date, love letters, courtship, engagement and ultimately the wedding," Schmor says. "All those elements are encountered during mergers and acquisitions."

Flaws that aren't exposed during the process can make for a rocky marriage.

"You can make a mistake at any stage of the process — I've seen early, middle and late mistakes," Schmor says. "I can't say that one trumps the others. But knowing what you've got and what you have to offer — the good and bad points — before you start the process is really important."

The Medford attorney will share his perspectives today during the annual seminar for Rogue Valley manufacturers and distributors presented by accounting and consulting firm Moss Adams at EdenVale Winery.

In addition to mergers and acquisitions, speakers will tackle emerging topics in banking, international business, converting gas to energy and economic development.

"Finding the right buyer and seller is important," Schmor says. "I've seen where a buyer never shoulda and seller never shoulda."

The common thread, he says, is that someone promised more than they had to sell or wasn't able to perform as a buyer and wasn't able to run the business or make it pay for itself.

Schmor says the size of the companies doesn't necessarily make a marriage easier, and bigger doesn't always guarantee smoother sailing.

"In fact, you may make the argument that there is less trouble with small ones," he says. "They paid for it, warts and all, and ignored the little problems. They aren't big enough for someone to go to court or stop the deal."

Unexpected problems — like a leaking underground oil tank that no one knew about for 50 years — can derail a deal after an agreement is reached, "or you run into problems actually financing the deal," Schmor says.

Growth doesn't always come through mergers and acquisitions. Companies that want to expand their markets overseas have plenty to think about.

Mark McGinley, a Moss Adams accountant, says both U.S. and foreign governments keep a close eye on foreign activity.

"The IRS, from an administrative and regulatory point of view is pushing for transparency," McGinley says. "There is a whole series of 12 to 15 tax reports U.S. companies might need to complete and submit."

The details grow as a company heightens its foreign presence.

"You may start with a joint venture with a foreign business partner or maybe set up a foreign subsidiary and bank account," McGinley says. "As you start to go down that path, you are required to disclose a fair amount of information associated with the foreign activity."

Reach reporter Greg Stiles at 776-4463 or e-mail business@mailtribune.com.

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