Growth through acquisition can be a winning business strategy, as seen with behemoths like Amazon and Google and smaller companies like Broadsign. It can give your brand the resources it needs to build new products or services faster than creating them from the ground up, which can be invaluable in achieving your long-term vision. It’s precisely for this reason that we’ve prioritized M&A: building out our M&A team and engaging them in regular discussions about growth opportunities and strategies. While acquisitions seem to happen quickly on the surface, they typically take months, even years, to land. Sometimes, as we found out with our first acquisition, this could mean that you end up handling two simultaneous transactions. If you find yourself in this position, here are a few things that we learned that can help make the process smoother:
- Assemble all-star teams
From HR to communications, support and engineering, acquisition to-dos can seem daunting. Double the list, and completing every task on time can seem impossible. Due diligence alone requires careful review of thousands of documents, and that doesn’t account for ongoing negotiations, transaction documentation and so much more. All of this can put a strain on resources. One thing we found helpful was to build separate teams for each acquisition with leads from each department as well as stakeholders from the companies being acquired. If you lack the right in-house expertise or the staff to handle the load, enlist professionals to assist with technical, financial and/or tax due diligence; employment legislation, etc.
- Get organized and prioritize
Once your teams are assembled, get the team leads together for a kickoff meeting where they can discuss what needs to be done to close the transaction and share thoughts and ideas that will form the basis of separate but unified plans for each acquisition. We also used this time to divvy up the workload and assign tasks that suited each team member’s strengths. As you move further into the acquisition process, prioritize what matters most and try not to sweat the small stuff. If a team member uncovers a small problem that can be addressed post-acquisition, make a note and leave it aside, but if there’s a huge red flag, be prepared to walk away.
- Brief your comms team in advance
Each acquisition involves a unique set of employees, customers, partners and shareholders, so applying a catch-all communications plan to both would be a mistake. Assuming you already have a stellar comms team in place, select the right team members to bring into the fold early on – even if you’re not sure both acquisitions will kick off at the same time. Give your comms team enough information to build separate but integrated communications strategies with a unifying message. It’s also important to think about the questions that might arise from the parties you work with as well as those of the companies you’re acquiring and develop a referenceable FAQ and roadmap, as well as other PR and marketing materials that answer those questions. And while confidentiality is critical to acquisitions, you should also be ready with strategies should the news leak to media, competitors, or employees.
- Expect the unexpected and leave time to improvise
From IP protection and shareholder difficulties to navigating foreign laws, you never know what you’re up against in until you’re in the thick of an acquisition. We recently learned that when you acquire two businesses, both with international operations, it’s crucial to familiarize yourself with legislation in those jurisdictions (i.e. employment regulations). Researching local protocol and processes that you need to follow ahead of time can help. To better prepare your teams for the unknown, hold brainstorming sessions ahead of time, discuss possible challenges and how you might respond, and build windows into your timeline to address issues as they come.
- Pre-plan for post-transaction integration
More than half the work required of an acquisition comes after closing, so devising carefully thought-out plans for managing the integration period is essential. For example, customers from the acquired companies will want to know who they should call for support, where they can reach them, etc. At the same time, internal employees will want to understand what’s happening and how their new team members will be integrated. We found success in starting with a small executive committee for each acquisition and then re-evaluated new team members to be brought into the loop throughout the process. In this planning period, it’s also pertinent to think about everything from cultural and customer product matters to plans for newly acquired offices, payment and billing methods, management and employee structure, etc.
- Don’t underestimate the importance of values
Defining a common set of values that every employee should live by is vital from the onset when onboarding new employees. When handling two acquisitions you’re dealing with three separate company cultures, each with its own set of rules, philosophies and operational preferences. While your company may have well-established charter, newly acquired employees are just learning it, so it’s important to put all your cards on the table, but be mindful that there will be an adjustment period. To get ahead of this, we identified key stakeholders from both companies from the onset and brought them into early conversations, which helped toward our goal of unifying teams post acquisitions. One thing we did very quickly after the acquisitions that all teams enjoyed was to get everyone in the same room for a celebration party.
- Be smart about financing
Review your finances like you would an annual physical; look for symptoms that show you’re healthy. Then complete due diligence on the targets to ensure you’re comfortable with the purchase, and don’t be afraid to walk away if it’s not the right move. Once confident in the targets, think about the best way to pay, and most practical financial instruments i.e. line of credit, cash, a combination, but be cognizant not to take on too much debt. Establishing a relationship with your lender months, even years in advance can help. Talking to them about your plans and goals will make the transaction process smoother when the time comes. We spent years developing a relationship with our lender, and our CFO met with them regularly, so it was no surprise when two acquisitions landed the same week.
In an ideal world, we could consult a crystal ball to find out if an acquisition is the right fit and when it will land, but since that’s not reality, we have to rely on research and gut feelings. If that means taking on two acquisitions at once, the short term pain is worth it in the long run. That said, it’s important to approach acquisitions with caution; I prefer to be at the front end of the bell curve as far as risk is concerned. Acquisitions aren’t the only type of investment that can improve your business. Sometimes it might make more sense to solely invest in a company or its technology, depending upon the circumstances, but that’s a topic for another article.
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