A recent upswing in mergers and acquisitions activity shows no signs of slowing, according to Deloitte’s 2019 M&A trends report. In fact, 79 percent of corporate executives and PEs expect the number of deals they close in the next 12 months to increase. On top of that, 51 percent predict a significant uptick in the total annual dollar value of deals between $500M and $10B. But as more and more businesses extend their reach through an acquisition strategy — especially in the tech space — it can be tough to make each buy successful.
I’ve been a part of many acquisitions over the years, on both sides of the coin, including three in the past 10 months in which my company has been the acquirer. I’ve learned that no deal is ever the same, but I’ve also discovered that if your approach is consistent, you stand a much better chance of success. Here are three “rules” I have about how to approach an acquisition and create a successful transition for all parties involved.
1. Know Why You Are Buying The Asset.
It’s essential to understand the company you’re purchasing at a molecular level. Dig into the history and foundations of the business to truly understand the growth pattern. Assess what worked and what didn’t in the company’s past. After you identify why you want to acquire the business in the first place, whether that be the IP or a specific team strength, stay laser-focused on that factor as you make the transition. By building a comprehensive understanding of the organization, you can carve out the pieces that deliver on what you set out to acquire and stay on track with growth.
2. Be Thoughtful About Employee Messaging.
Your approach to an acquisition transition can’t be one-size-fits-all. If you’re buying a company in a distressed state, it’s safe to say the remaining employees are stressed, too, but they’re also likely loyal. For this situation, it’s important to adjust your messaging to work out why they stayed and build on it. Show them the bright future that’s in store for the company through the acquisition to help boost morale and keep them on board.
If you’re acquiring a successful, growing company, adjust your messaging to show employees how the deal will accelerate the business. Employees are a critical factor in company growth, so remind them of their key role in building the business so far and how they’ll continue to play a vital role in the growth moving forward. As you adjust your messaging, you’ll be able to build more employee buy-in, creating an energized atmosphere for everyone.
3. Get To Know The Executives Outside Of Work.
Taking time to get to know the acquiree’s executives outside of an office atmosphere can be vital in determining who plays a key role moving forward. But, just as important, don’t let this period last beyond six months. You likely won’t need any longer to decide who is key to future growth, and keeping employees around for too long before parting ways can breed negativity in the new organization. When it comes time to part with some, be straightforward with them on the reasoning behind your decision.
As you consider your next (or first) acquisition, always be ready to adjust your strategy, plans and execution. There is no such thing as a cookie-cutter deal, but these practices can help create a streamlined path forward as you enter into a new phase for your company.