The best mergers are not merely conceived as simple financial transactions. They are done in the spirit of advancement and cooperation. By combining and sharing equity, operations and resources, firms can grow faster and be more profitable than they could separately.

But merging is a process, and those who want to bring their firms together need to respect it and treat it with care.

Mergers unfold in three phases: the preparation phase, the execution phase and the collaboration/integration phase. In my experience, teams often try to rush into the execution phase when they find someone interested in merging, and they fail to give the preparation phase the proper respect it deserves, sometimes skipping over it entirely.

This faux pas can doom the process from the start and increase the chance it fails. Well before firms begin to execute the mechanics of a merger and integrate their teams, they need to devote a significant amount of discovery time to determine whether their philosophies and approach to managing clients, assets and people are aligned.

Discovery
When you’re considering a merger partner, there are some basic questions to consider: Do you like and respect the leaders? Are they trustworthy, credible, authentic and morally acceptable? How do they treat employees?

The answers will help you determine whether a cultural fit exists. Any oversight during the discovery process could wreak havoc and kill the transaction.

For that reason, you should dig deep into the details of all the businesses involved. You should fully evaluate each partner’s goals and the inner workings of each entity—including the similarities and differences of all business lines, as well as their functions and processes—and consider their financial strengths and weaknesses. Once you’ve taken these steps, you should objectively analyze the benefits and drawbacks of merging.

Every successful firm has a set of core offerings that distinguish it from its competitors, whether it is expansive planning services or a unique investment approach. Likewise, most firms also have gaps in their offerings, capabilities and capacity. So those who pursue mergers should have as their goal to create one compelling and sustainable firm.

Pathfinder
When you embark on the merger path, it is prudent to have a well-crafted plan to communicate the ways that management will change. Your teams will want to know how they fit in. Who is reporting to whom? Will they still have a place in the new entity that emerges? When employees hear about merger talks and lack details, they worry and might even become unproductive.

It is common to have overlap in functions when combining two RIAs—including human resources, accounting, finance, portfolio management, operations, technology, legal and compliance. However, keep in mind that a larger, growing firm can actually produce more opportunities for some employees.

There may be more than one location. More room for employees to advance or learn new skills. There may be new opportunities for the firm to specialize, expand and offer new services. So it will give peace of mind to all the parties if you determine your people strategy during the preparation phase.

Of course, creating new reporting lines for the organization is a delicate process with many potential potholes, as founders will naturally want to protect their people. What impedes this process further is that many founders do not have much experience yielding to others and considering other viewpoints about critical, firm-wide decisions. Many are independent businesspeople for a reason: They trust their entrepreneurial instincts and do not like being told what to do.

Determining who will make decisions and what that process looks like in the new combination of companies are prerequisites to advancing to the next phase.

The Easy Part
Many of the items thought to be points of contention often are not. Establishing new titles is a good example. Most founders pursuing a merger (or a sale) do not care that much about their title, or if they do, they can be easily assuaged.

The same goes for possible technology platform and application conflicts. While each firm in a merger brings along its own list of preferred partners, these matters are not often deal-breakers. The functionality and the pricing of the platforms are the overriding concerns.

Business owners considering mergers might be thinking of off-loading some of their current responsibilities and sharing them with others, which is why some issues that could be considered major hurdles tend to be minor.

Better Together
The preparation phase of a merger forms the foundation for what follows. So much so that when you fail to master that part of the process, the execution and collaboration/integration phases can become problematic.

In many ways, mergers are like marriages (without the fun stuff): When considering a potential partner, it is prudent to first work through a series of important issues and fully discover whether the benefits of merging outweigh the drawbacks. Often, they do.

Industry influencer and transition specialist Carolyn Armitage is a managing director with ECHELON Partners, a Los Angeles-based firm that provides investment banking, valuation and consulting services to registered representatives, IBDs, hybrids and RIAs nationwide.