Mergers;

 

When two companies merge, there's often a temptation to gloss over tough questions about which company's culture will be dominant after the merger. But the failure to resolve such issues can lead to problems down the road.

Last winter, American Star Software Inc. (d/b/a Star Software Systems), in Torrance, Calif., worked out a merger with another software company of about the same size -- annual revenues of about $3.7 million. It was to be a merger of equals, with each set of owners holding 50% of the new venture's stock. Neither company would dominate. That, says Star Software president William Webster Jr., was a mistake.

The problem, says Webster, was that the two companies had very different cultures. Star, for example, was a jacket-and-tie outfit, while the other company went for jeans and T-shirts. The other company made loans to employees; Star, which considered its benefits package superior, did not.

"It was very difficult," says Webster, noting that the merger was eventually scrapped for other reasons. "The lesson I learned was that somebody has to be the acquirer. Otherwise, you're asking for trouble."