Acquisition can be a complicated, often immensely stressful process, but it doesn’t have to come at the cost of your company’s hard-earned culture.
It’s a common misnomer that an acquisition will always favour the agenda of the company or group taking a majority (or total) financial control or ownership over another. Or that the company being acquired will be required to sacrifice its culture in favour of either the new controlling party’s. It doesn’t have to be that way, and I should know. Companies I’ve founded or run over the past two decades have been acquired repeatedly.
In 2009 I founded data and analytics firm InfoReady where I was managing director for 10 years before we were acquired by ARQ (formerly Melbourne IT) for $35 million. What followed was the then ASX-listed company splitting into two divisions, with our Enterprise business (which remained as ARQ) being acquired by Quadrant Private Equity and the existing management team including myself. As a team, we grew ARQ to be one of Australia’s leading digital tech consultancy firms. This year, ARQ was acquired by Singtels’ NCS NEXT to the tune of $290 million.
It’s been a wild ride and I’m still here, strapped firmly into the front seat. Acquisition can be a complicated, often immensely stressful process, but it doesn’t have to come at the cost of your company’s hard-earned culture. Read on for some of my key takeaways and advice on a successful acquisition, for everyone involved.
Objectives vs. culture, for the greater good
As long as business objectives and goals are in alignment, the rest can be figured out. What is your company’s purpose? What are its values? Are your overall objectives and goals aligned with the other party’s?
Cultures can evolve; in fact, I’d say it’s almost impossible to find two companies with identical cultures. There will be differences in schedules, dress codes, flexible working policies, and so on. As a tech company, ARQ has very much a t-shirt culture, for example, while our Singaporean-headquartered NCS is more formal. Likewise, in Singapore, the work culture is 24/7, whereas here it’s more ‘work hard, but also enjoy your free time.’ Both parties respect each other’s ways of working and are using the opportunity to learn about – and enhance – our new culture.
The culture of the company with the majority financial interest does often take priority and requires a level of respect, but acquisition is an opportunity to merge the ‘best of’ both worlds.
Want buy-in from staff?
Communication and transparency – via town halls, briefing sessions, and both formal and informal communications channels – is key to ensuring your workforce chooses to come on the journey with you. There’s no quicker way to destabilise your employees and client base than by making sudden announcements and shock structural changes.
Pay special attention to dedicated management briefings that will help ensure your messaging is consistent across the board. This will empower your leadership team with sufficient information that they feel ready and able to confidently communicate about the acquisition with staff at every level of the business.
Be open to feedback and questions, compiling and managing them in shared files to ensure all concerns are addressed. Also, strive to give people opportunities to work on bigger projects they may not have had the chance to pre-acquisition. Ask them what they want to work on, then find a way to let them do it. Ensuring people are doing work that excites them will help them with the transition and to understand their role in the new company. People just want to feel part of the bigger picture, to be appreciated and heard.
Acquisition is a two-way street
When working with the new organisation, be prepared that you may receive input and feedback you may not want to hear or feel is needed. It’s a balancing act; they have acquired you for a reason, so you want to feel valued for that, yet you also need to stay positively focused on the enhanced value of the new company.
And if, as a founder, you plan to remain within the organisation, ensure there is an understanding and mutual respect from the start. You will want a buyer who has a role for you in the business and wants you in their team.
Beware of a merger or acquisition that feels unbalanced from Day 1. If they have a very set way of doing x or y, you will notice this before the acquisition. So if there are red flags that will impact your customers or how you deliver a service, or which have the potential to impact the financial value of your business, then it’s likely not the right deal for you.
If your company has been targeted for acquisition, make sure your potential new parent company shares a similar DNA. Acquisition is a two-way street, so don’t be afraid to interview their culture; you’re going to have to work with them, too.
Tristan Sternson is CEO of ARQ Group and co-lead of NCS NEXT