This week I’ve invited my friend, Jeff Lynn to comment on one of our favorite topics.
Jeff is an experienced business leader with global management experience, having created and led businesses ranging from entrepreneurial startups to global workforces of 13,000 and $3 billion revenues.
Acquisitions have a bad rap. I searched for “failed acquisitions” and got 129,000 results. Just for the last month!
All companies aspire for growth, and organic growth and acquisitions are the two options. Leave acquisitions off your list of important strategic possibilities for your company and you’re trying to succeed with one hand tied behind your back.
Like other strategic initiatives, it’s easy to do acquisitions badly; but it’s possible to do them well, and have them be a persistent positive contributor to your company’s growth and profitability.
So the question is “how do I do them well instead of badly”? I’ve acquired dozens of companies and been acquired a few times as well, and here’s my checklist:
- Plan for acquisition integration early. Very early – as part of your selection of target companies to acquire. You may be looking at two possible candidates for acquisition that look similar in terms of revenue, profitability, number of employees, geography, etc. But one may be easy to integrate into your business, and the other might be a nightmare.
- Plan for acquisition integration in detail. Plan for the specific integration of financial reporting, technology, benefit plans, sales compensation, customer communication, PR and Marketing, methodologies and processes. Make the decisions early, during due diligence pre-acquisition, about which systems and processes will survive and which will terminate. Time is not your friend, “we’ll figure it out later” is a prescription for failure.
- Assign one or more senior-level acquisition integration leaders to “program manage” the integration. Hard decisions will need to be made and communicated respectfully but firmly. People from both companies will have competing daily priorities to their acquisition integration responsibilities, and it takes a senior leader to make sure they are triaging the important integration responsibilities high enough on their list.
- Overcommunicate. Usually, lots of people are scared before and after an acquisition, almost always the “acquirees” but sometimes the “acquirers” too. Tell people in advance exactly what’s going to happen when. Send out a newsy, weekly “Integration Update”. Remember to communicate with both sides of the combination, not just the acquired employees.
- Do “post-mortems”. This is something that Ian and I talk about often with respect to acquisitions. What went wrong? What went right? Learn from each and every deal because every deal is different, and you’ll keep improving your team’s acquisition skills.
Don’t shy away from acquisitions as a key growth strategy for your company, just learn to get good at doing them!
Jeff has spent his career successfully scaling high-growth businesses, keeping all the revenue, cost, and profit variables in line. Most recently he was President of Tribridge, a national technology services company based in Tampa, FL. Jeff is an experienced business leader with global management experience, having created and led businesses ranging from entrepreneurial startups to global workforces of 13,000 and $3 billion revenues. Prior to Tribridge, Jeff held executive positions in Dell, IBM, Ernst & Young, and Compaq Computer. He founded his own strategy and technology consulting firm in New York City, FinExc Group, which he sold to IBM. Jeff holds a B.S. in Computer Science from the Massachusetts Institute of Technology, and a Master’s degree in Management Information Systems from the Sloan School of Management, M.I.T.