As the tides of fortune within the business and professional communities begin to show signs of turning, so management can begin to shift its focus from a pre-occupation with survival to planning for development and expansion.

There are signs that mergers are once again featuring on the agenda of possibilities for many firms - both large and small, and in the UK as well as in many overseas jurisdictions.It is now possible to take stock and to draw some reliable conclusions from the frenetic merger activity witnessed in the halcyon days of the 1980s.

Whilst there have been both spectacular and modest successes, there have been too many disappointments and perhaps rather more total casualties than have actually hit the headlines.Over the last ten years our experience in assisting to reconstitute mergers that are ailing - usually one or two years after they took place - has enabled us to identify three key factors that will invariably dictate the success or failure of a merger.First, a merger must be entered into for valid reasons.

All valid reasons for embarking upon a merger will involve strengthening the infrastructure of a firm through the addition of previously unavailable resources or capabilities.

The merging of two firms that are, in effect, mirror images of each other will simply serve to increase the size of the organisation but will add no other quality.In most such cases the disadvantages of increased size, eg increased overheads, more difficult communications and the problem of maintaining consistent quality standards, will outweigh any advantages that increased size itself may afford.

Certainly, a merger based upon perceived economies of scale will be at serious risk of disappointment or worse.Examples of valid reasons for a merger strategy, therefore, might include:-- the acquisition of technical skills to supplement the existing range of products or services, or ease the penetration into logical new areas of expertise;-- the broadening of the client base in a manner that will make greater use of already developed expertise;-- the broadening of the market sectors in which a firm is operating;-- the extension of the client base in a geographic sense.Examples of reasons for merger whose validity should be treated with extreme caution might include:-- 'we need to be larger';-- 'we need to acquire John or Mary';-- 'a merger will improve our profitability';-- 'a merger will improve our management'.Perhaps the prize for invalidity, in this sense, should go to the firm that merged for the purpose of diluting the impact of two difficult partners.An initial exercise at the contemplative stage of a merger is, therefore, to draw up a comprehensive list of criteria and the means of verifying their validity in an honest manner.

Not only should a merger be part of, or fit into, an existing strategic plan, it should itself be planned meticulously according to detailed checklists and stages wi thin a certain but realistic timescale, all established well in advance of actual negotiations and implementation.

The common practice of leaving potentially contentious issues to be resolved or legislated for following the merger is again to court disaster.It is to be strongly recommended that a detailed checklist of questions to be researched and answered should be prepared under such headings as:-- financial matters;-- clients and possible client problems;-- legal issues, eg burdensome contracts or any claims in the pipeline;-- partnership structure and arrangements;-- personnel matters and policies;-- premises obligations and requirements;-- office equipment - requirements, compatibility, transferability etc;-- management systems for the existing firm and the new firm;-- public relations, to include security, handling of press, house style etc.It is important that the questions embodied in the checklist should not be answered only by the proposed merger partner but also by the initiating firm.

This provides an excellent opportunity to rehearse responses to questions that are likely to be asked by the other side.Being caught unprepared by a question put during a meeting - particularly one that may involve revealing problems or weaknesses within the firm - can seriously harm a firm's negotiating strength.Checklists of this nature could and should be used for the purpose of compiling two important documents long before any possible merger candidates are identified: a detailed profile of your own firm; and a detailed analysis of the nature, composition, culture and so on of the ideal merger candidate to be sought.The demonstration of such a depth of pre-thinking and planning will not only make an all-important positive, initial impact: it will also give the firm a strong negotiating edge from the outset.The first meeting in a merger negotiation should be particularly carefully prepared for and handled.

The agenda should be so drawn as to be sure, at this preliminary stage, that all the most common potential 'show stopper' issues are touched upon.

They should either be cleared away or have procedures set up to tackle and resolve them before detailed disclosures and negotiations take place.Again, it is suggested that the well-planned merger should comprise two stages.

First, there should be a contract to merge that will be executed once all due diligence with respect to the existing firms has been completed.

Second will come implementation of the merger several months after the execution of the contract to merge.

The intervening period should be used to settle the numerous logistical issues to be considered in relation to the operation of the new merged firm.There is a certain hypocrisy in the situation in which most solicitors are critical of clients who nowadays undertake for themselves work that historically might have been expected to be undertaken by a solicitor, be it the conveyancing of their home or obtaining probate of grandma's will.For most solicitors a merger of their firm is a first-time and one-off experience.

Having acted for a client in an acquisition or merger project is never the same as, and will not necessarily equip one for, the handling of one's own merger.

Yet many firms will attempt to cross this minefield without using outside experienced assistance, supposedly on the criteria of saving the 'expense' that such assistance would involve.

Those firms which recognise that such 'expense' will, in fact, be recovered many times over, as an investment in a merger with a much greater l ikelihood of success, are the firms which tend to reap the true advantages that a merger can produce.

They are also more likely to avoid the manslaughter that can result from failure in this field.So, who will decide whether your merger turns out to be a true merger or a manslaughter, and when will that decision actually be made? The decision rests squarely upon the parties themselves and the way they go about it.

Furthermore, that fateful decision will be made in the very initial stages in their answers to three questions:-- do we have valid reasons for a merger?-- will we take the trouble to plan it with meticulous care and resist the temptation to rush it through? and-- will we take advantage of outside experience to assist us to address all the vital issues and avoid the pitfalls that await us?