Top 4 Lessons Learned From Acquisitions_David DeWolf_1200x675

The Top 4 Lessons I’ve Learned from Acquisitions

1024 576 David DeWolf

I’ve been involved in a fair share of acquisitions over the years. We recently completed 3 in a span of 8 months, and our first acquisition dates back to 2009. That’s when 3Pillar Global (then Three Pillar Software) acquired Firefly Database Solutions and PKR Internet. The rest, as they say, is history. If only it were that easy…

Acquisitions can be powerful growth accelerators, but they are notoriously risky and hard to navigate.

While the vast majority of diligence focuses on strategic and financial rationale, it is the cultural and human elements of a combination that are fraught with peril. The integration of cultures is difficult, at best, and people naturally fear change. Changes in reporting structure and even brand identity impact people far more than most would estimate. Compensation and benefits changes are impactful, important things that it’s only natural for your teams to wonder about when news of an acquisition breaks. 

There are also a myriad of logistical challenges that come with the territory on the operational side. Onboarding a large number of new employees simultaneously while also merging all of the companies’ systems and data can be head-spinning. Even when that process goes well, “huge effort” is about as low a bar as you can hope for.

And we haven’t even touched on the many items necessary to ensure a smooth transition for clients. 

But enough with all the challenges. What have I learned that can help make your life easier the next time you go through an acquisition? Here are the top 4 lessons I’ve learned about how to handle the immediate aftermath of an acquisition. 

Prioritize the People Above All Else

There are lots of shiny objects you can chase after an acquisition goes through: publicity about the combined company, game planning your integration strategy, or shoring up client relationships. Important as the latter two are, your first priority in the wake of an acquisition should be on the people in both companies. Really caring about their feedback and opinions, diving into their ideas for what the future combined company could look like, and going out of your way to engage and make yourself available are imperative.   

When you meet with the employees of the company being acquired, which I recommend doing as soon as is humanly possible, sit down with them and listen to every last question. Ask “What else?” or “What other questions do you have?” until you’re blue in the face. Respond candidly, or pledge to get back to them on questions that you can’t answer.

Anticipate as many questions as possible before the meeting. This will prepare you in advance for most of the questions you’re likely to hear, and it can help you prod the group a little bit on the off chance they don’t start ticking off questions. “I was anticipating you’d want to hear about…” and “Usually when I have these meetings I get asked…” will typically open the floodgates and get the dialogue flowing. 

Paint a Picture of the Future 

Our expectation from the start is that any company we acquire will eventually become a fully integrated part of 3Pillar. That can be jarring to employees of the acquired company. Many of them have poured some of the best years of their lives into making those companies successful. 

That said, after every acquisition there comes a “rip the Band-Aid off” moment where it’s less painful to just make the integration happen than it is to drag the process out further. I’ve written recently about how insanely hard it is to run a successful business. Perhaps the only thing more difficult is running two successful businesses. And that is essentially what you are left with if you acquire another company but maintain separate operations.  

Be Radically Candid from the Very Beginning

Job security is a common concern in the wake of an acquisition. The harsh reality is that this concern exists for a reason. There are most likely going to be some redundancies in roles between companies. From the very beginning, be open about your intent. Get out in front of assumptions and be up front about the synergies you are expecting and how you will navigate the integration. Work with and take care of those individuals who will be impacted.

Communicate Early and Often 

Getting everyone rowing in the same direction quickly is paramount in the aftermath of an acquisition. That can only happen once the whole team knows their roles and what’s expected of them. Hopefully, as the acquisition became more and more likely to close, you were able to get a head start on what a combined organization could look like. We use a variety of mediums, including email newsletters, Mattermost (think Slack) channels, and videos, just to name a few, to make sure we’re getting salient, important, timely information to everyone who needs it.  

Wrapping it Up: Acquisitions Don’t Have to Be Painful 

If you follow the steps listed above, you’ll find out perhaps the most important lesson: acquisitions don’t have to be painful. Are they a lot of work? Almost always. Will they give you a few gray hairs? Chances are. But can the benefits far outweigh the short-term pain? 100 percent, in my experience.