Business Merger??? any thoughts?

I was wondering if anyone had any advice on the best way to handle the potential of a business merger. There is a window washing company in town that I've traded referrals with for the last couple years and I've known the owner as a friend for many more years than that.
We are just in the stage of kicking the idea around but I find myself at a blank when trying to figure out the best directions to go in researching how we could most effectively merge so that we would both benefit. Anyone have any expererience with joining companies? Any thoughts of things you would or wouldn't do again? Any and all input is appreciated. Let me know what information I can provide to help.

thanks

John Simpson

from experience, never go into business with a friend. the friendship will end. keep trading referrals is my suggestion.

make a list of what the benifit's of the partnership would be.
Then make a list of the downfall's.
IF THE FIRST LIST IS TWICE AS LONG AS THE SECOND?
tHEN THINK ABOUT IT.
What do you do when you dont think your partner is working as hard as you but get's the same paycheck?
One guy allway's become's a salesman and the other ''hand's on''.
Can you live with this? Can he?

I agree with the above comments, but if you feel compelled to merge, then a couple of things you need to focus on:
1. Organizational structure - partnership, Sub S, C?
2. Method of valuing the two businesses - maybe you don't care, just a 50/50 split. Value of eqp, customer list and potential cash flow (good will)?
3. Related to (2) method of compensation for each. I have some ideas on this if you are interested.
You need to get your accountant and (cough) attorney involved sometime in the process.
Many other issues.

Everyone, thank-you for the responses. Ron, I do have some experience with a partner and I ended that a few months after we started (I put up the money, was doing 90% of the labor, and had sold more than half of the jobs). My goal, if we continue with the thoughts of merging would be to avoid that situation and create a sound partnership. The up side is that I've watched this window washing company for the past 5 years and I know the owner is a hard worker with good people skills.
As to structure, it would be incorporated (not sure what type yet).
Valuing the businesses;I know his annual sales are better, but he is also running more employees and does not have the same investment in equipment that I have. I carry a larger residential customer list while he carries a larger commercial one. We would want to clarify the values instead of doing an equal merger I think.
Bill, I'd love your input on compensation. I'm clueless on the best way to do it. I think that you should be paid for the work you do, but with us both bringing new customers in and selling jobs and both wanting owners profits it leaves me in a state of confusion.

Thanks again and I'd love to hear more of your thoughts

john

The best Advice that I could give is what Extreme said above. There are way to many things that can go wrong with an equal partnership. On top of that list is that one of you two will rise above the other because obviously your both highly motivated to start out with but you can't be dead even on that. You will most likely have a major falling out down the road and if that happens.........YOUR SCREWED as is he.

I'd be willing to bet that you will see an answer of at least 10-1 in to not go into a partnership. Why do you supposed that is....Think about it.