Paul Mattaini, a partner with the law firm of Barley Snyder LLC, which has offices throughout central Pennsylvania, cautioned those attending that, based on his experience, merger transactions "seem to be more difficult to get done over the past five years."

Mr. Mattaini added that there are two main reasons why an acquisition fails to live up to expectations. The first is a tendency to "do the deal, then do nothing" when the buyer doesn't make full use of the acquisition. There is also what he termed "acquirer arrogance," when a buyer acquires a company, then changes how that company operates so it will fit into the new organization.

Mr. Mattaini cautioned that both buyers and sellers perceive potential deals inappropriately. Buyers, he said, go into negotiations with unrealistic expectations, especially regarding time. "It always takes longer than people think" to do a deal, he said. "It is a process."

On the other hand, many sellers expect to get their asking price paid on closing day and walk away. "That's wonderful, but I can tell you it doesn't happen very often."

Another caution is the potential toll a sale can take on sellers. "It can be a very emotional process" to sell a business, especially if it were owned by a parent or grandparent, he said. Moreover, the amount of time it takes to put a sale together can actually have an effect on the sale, he said. "People get so into the process that the underlying business starts to underperform," Mr. Mattaini said, which "almost certainly can have an effect" on the ultimate price that is paid.

He also mentioned the "cultural aspect" of a transaction, using the example of banks, which have a different structure than insurance agencies--i.e., not being comfortable with a producer making more than executives or the looser scheduling. "You have to step back and say, 'Is this the same deal that I thought it would be?'" Mr. Mattaini said.

He emphasized due diligence, saying it's "often not done early enough or thoroughly enough." He said buyers should be careful about committing to anything until they've looked at the target.

Mr. Mattaini warned that sellers need to conduct due diligence and to consider the question of when to reveal all to the buyer. "There's no great answer" to the question of when a seller should "open up the whole cabinet," he said.

Whenever due diligence occurs, he warned sellers, they need confidentiality agreements to protect their business and trade secrets. "Make sure you have one, and make sure you've had someone look at it" to make certain it provides the right protections, he said.

Mr. Wevodau agreed. He said sellers should conduct what he called "reverse due diligence." They need to do so to, among other issues, ensure that the buyer can actually make the transaction happen.

Sellers should also contact others who have dealt with the potential acquirer and examine how the company plans to operate the acquired business. Specifically, the seller should look at how the new owner will maintain relationships with clients and carriers at the acquired firm.

One question a seller needs to ask, Mr. Wevodau said, is whether the buyer intends to rebrand immediately, which could cause confusion for clients. This is especially important in cases where the purchaser gets an "earnout" which pays them more if the company performs up to certain standards after it is acquired.

In general, Mr. Wevodau said his firm takes a "systemic approach" to examining potential acquisitions for clients.

He stressed the serious nature of looking at the usual financial risks such as concentration risk, loss experience, shock loss and relationships with carriers and the potential effect that could have on the acquired firm's contingency compensation agreements.

Integration, however, is "the biggest hurdle. People just don't think about," Mr. Wevodau said. There are some important issues in terms of technology, such as what platform the acquired firm uses, and whether this platform is compatible with the platform being used by the acquisition target.

Additionally, there are concerns with what he called "culture clash."

He explained that an unwillingness to understand what combining companies means can be a "deal breaker."

Of course, culture clash can also kill deals with smaller problems--especially with issues such as vacation time or personnel--as people are acquired into a larger firm. "We've had people willing to walk away because they didn't get a personal secretary," he said.

Once these issues are identified, the "second date" phase of an acquisition is entered into, as the company sizes up the value of the acquisition, Mr. Wevodau said.