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key takeaways
- Introduce yourself to the acquiring team before closing and explain the reason behind the deal.
- Don’t promise that “nothing will change.” Transparency creates trust.
- Address employees’ real concerns – job security, benefits and leadership – to preserve the value you bought.
Mergers and acquisitions (M&A) get the headlines. Big deal announcement, photo session, press discussion. But the real work and real value starts after the ink dries. according to Harvard Business Reviewbetween 70 and 90 Percentage of acquisition fails. The majority fail not because the deal was bad, but because integration failed. A successful integration is particularly important in private equity portfolio companies (Portcos). As an executive charged with value creation, the quickest way to lose the trust of your board – and potentially your job – is to buy EBITDA and then lose it.
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You can find a checklist for closing activities anywhere, and countless consulting companies can help you rationalize the tech stack. But most leadership teams fail to make employees feel like they are part of the change, not its victim. In my experience, you can reduce the risk of an acquisition before the deal closes by involving both the target company’s employees and your existing employees. Here are some of my favorite tricks to help you feel confident in your team:
Before the deal closes, I host a town hall with the current owner and as many employees as possible in the room. This town hall begins with the current owner sharing that they have decided to sell, the why behind this decision, and why they chose us as their partner. This gives me the opportunity to build rapport and quickly address any potential concerns.
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In this town hall and in subsequent meetings, I have been exceptionally clear about what will and will not change – and when. A mistake buyers make is to promise that nothing will change – something is always changing. Even if it seems as minor as changing the system in which they work every day, these changes are a clear reminder that you have not kept your promise. Smart Operators goes a step further by highlighting when these changes are likely to occur – what you can expect 1 day, 30 days after closing and even changes that may take some time to be delivered
People make the difference, even in businesses where your patents or features drive acquisitions. Acquired employees earn the right to become leaders by making their own concerns their focus. As soon as they hear the news, every employee will ask, what’s in it for me, Am I going to lose my job? Will I have to change benefit plans and doctors? Will they fire any of my team?Unless you address these topics, these employees will have a hard time getting excited about change. And this includes your existing employees: how will new hires impact their situation? Be careful on these messages. It helps to brainstorm the questions you might expect and to leave behind a “Frequently Asked Questions” document that addresses these questions.
M&A may be sexy, but integration is where the change happens. Accomplish this, and you’ll unlock the deal’s full potential. Miss this and that press release will be a reminder of what you failed to execute.
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key takeaways
- Introduce yourself to the acquiring team before closing and explain the reason behind the deal.
- Don’t promise that “nothing will change.” Transparency creates trust.
- Address employees’ real concerns – job security, benefits and leadership – to preserve the value you bought.
Mergers and acquisitions (M&A) get the headlines. Big deal announcement, photo session, press discussion. But the real work and real value starts after the ink dries. according to Harvard Business Reviewbetween 70 and 90 Percentage of acquisition fails. The majority fail not because the deal was bad, but because integration failed. A successful integration is particularly important in private equity portfolio companies (Portcos). As an executive charged with value creation, the quickest way to lose the trust of your board – and potentially your job – is to buy EBITDA and then lose it.
RELATED: Considering Franchise Ownership? Start finding your personal list of franchises that match your lifestyle, interests, and budget now.
You can find a checklist for closing activities anywhere, and countless consulting companies can help you rationalize the tech stack. But most leadership teams fail to make employees feel like they are part of the change, not its victim. In my experience, you can reduce the risk of an acquisition before the deal closes by involving both the target company’s employees and your existing employees. Here are some of my favorite tricks to help you feel confident in your team:
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