As the economy gathers steam, I know many management teams are considering hitting the acquisition trail (some for the first time). Here are a few thoughts on some operational tricks to bear in mind.
Top Operational Tricks
- Don’t even think about doing an acquisition until your own house is in order. Only when you have a successful, aligned, process-driven business, should you consider adding to the group through acquisition. Imagine a dysfunctional family with high maintenance teenagers, highly geared, both parents working and the adoption of two new toddlers comes up for discussion! Really. I fear many companies hit the acquisition trail in this state of readiness.
- As you examine a target company, remember your need to integrate every department into your own departmental structure (unless it is a stand-alone deal). Marketing teams, sales, commission structures, accounting systems, new product development, service departments etc. Therefore define your due diligence with a post acquisition integration frame of mind. These people will be your people.
- Consider carefully what would change if you owned the target? Examine every aspect of the target. Could you transform their distribution network? Could they transform your service division? Could you enhance their product development team?
- Get conversations going as quickly as possible with the operations team of the target, not just the owners (this will be resisted but you must try to negotiate maximum access). You need to understand how they are really winning business and executing that business. Depending on one or two business winners? Depending on one or two special operational people? Is the software code dependent on one woman or one man?
- Consider the reaction of the target’s customers. Are there conflicts between your customers and theirs? Is customer attrition going to be a problem? Bad press can build unfairly over many years. Perhaps your reputation in the industry isn’t as strong as you think!
- Culture is not a verb. You don’t “do” culture. It’s a corollary of years of actions. You create a culture. Can you assess what culture exists at an operational level ? Does the target respond to customer support calls instantly? Does the target’s staff understand what a hard days work feels like. It sounds brutal but remember these people will be your people!
- Consider all the new staff you are acquiring in the target company. Do you have the systems in place to hire dozens of new employees simultaneously?
- What’s your story? What do want the message to be? When you are buying, you are selling. You are selling who you are, how you do business, the sort of people you are, and the sort of workplace you’ve created.