I am often asked why some mergers and/or acquisitions don’t go the way a buyer and/or seller originally thought.
There are multiple reasons why a transaction may go awry, of course. For instance, the seller may have a different corporate philosophy from the buyer. Or there may be friction between the two sides regarding how to take the firm’s digital services to a higher level.
Although the investment in legal, accounting and consulting fees will turn into a write-off it, that is much more preferred that the deal closing and the parties realizing that it was a bad marriage several weeks after the ink is dry.
But once a closing happens then it should all be about the positives, starting with most effective ways to integrate the seller firm with the buyer firm.
Transparency is key
For instance, when you look at a transaction from the staff perspective, a sale to a bigger firm should be viewed as a positive development, I strongly advise sellers.
The selling firm is the recipient of new talent, more capabilities, additional resources and, most important, sharper digital expertise. If individual executives are committed to adopting new skill sets and improving their talents, they have unlimited potential to grow along with the company in its new incarnation.
Buyers also have a positive outlook when it comes to the newly acquired staff. In addition to looking to improve growth and land more quality clients, buyers acquire PR properties to bring in new talent to bolster their education, skills and PR training.
Whether it’s regarding staffing assessments or other management areas, if both the buyer and the seller are committed to transparency, open communication and collaboration, the integration period should be viewed as a growth period.
For example, the buyer may have an extensive digital division, which exceeds the capabilities of the seller. But the seller, being smaller in size, may have perfected a time management system that has practically eliminated scope creep, or overservicing. With overservicing a major issue for the buyer—as it is for most firms—the seller can implement her time management system into the buyer organization. The seller may also have a superior new business pipeline system from which the buyer can benefit. It’s all about a commitment to collaboration and working together to maximize the talent and efficiencies of both firms, the goal being 1+1=3.
There may also be instances when a senior VP of the seller may be more knowledgeable than the MD of a buyer office about certain practices areas or business sectors. Both sides should treat that as an opportunity to work and grow together. The seller senior VP works with the buyer MD to instill a more entrepreneurial focus within the firm. That’s how you maximize the value of the acquisition-integration period.
Plan in advance for optimal results
The post-closing integration process is extensive and requires proper planning. Leverage the strengths of the buyer and the seller in order to make the newly merged firm stronger and more competitive. And it should be up to the leadership of both firms to immerse themselves into the integration process; this is not the responsibility of other staff or executives. Management must own the success of the integration period.
The seller CEO/second tier of management should be at the forefront of the integration, working hand in hand with the buyer leadership in creating an integration plan, week by week. After closing, the strategy for a successful integration should be mapped out, in writing, for all involved to use as a guide moving forward.
Set up teams and committees to maximize the expected synergies of the merged firms. Combining firms should inspire everyone involved to work productively with others who may have different work styles, perspectives and learned processes.
An integration manager should be selected from both buyer and the seller, reporting to the CEO of each firm. The managers will be held accountable for creating a successful integration. They will lead the process and act as a sounding board for the newly combined staff.
Both organizations will experience change as a result of a merger or acquisition. But it’s an incredible opportunity to innovate and open doors that were previously closed.
I have always said that, if done the right way, bigger is better for creative services firms. Our annual benchmarking reports have repeatedly validated that presumption.
Rick Gould, CPA, J.D., managing partner of Gould+Partners, is the author of “The Ultimate PR Agency Financial Management Handbook: How to Manage By The Numbers for Breakthrough Profitability of 20% or Greater,” and “Doing It The Right Way: 13 Crucial Steps For A Successful PR Agency Merger Or Acquisition.”
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