I have been through a number of M&As – on both sides of the fence. I thought it could be useful for me to share what I have learned about making an acquisition work. First of all – let me make it clear, integration after an acquisition, even when handled perfectly, is hard (and it is never handled perfectly). Second, distance makes a difference. Unless the companies are located walking distance (or a short drive) from each other – the distance (both physical and cultural) will be a real obstacle. Let me start with some rules for the acquirer:
The trouble starts with the whole mechanism of the deal – everyone is focused on closing the deal – no one is thinking about what happens the day after. This leads me to rule 1 – make sure that someone is thinking about the day after. There should be one person from each side, but at least one senior person on the acquiring side. Give that person both responsibility and power. Make sure they have clout in your organization, know how to get things done – and have exceptional people skills. Actually people skills are the most important attribute.
Rule 2, 3, 4 – Communicate. Communicate. Communicate. You can never communicate enough. The startup is far away, and has a unique culture. Because of the distance you can’t have impromptu meetings in the hallway, lunchroom or at the coffee machine. You need to keep people informed, and if the Brits and American are two people divided by a common language – just imagine when there is no common language. Even if the two management teams both speak english, if it is a foreign company you can assume they don’t always understand the nuances of american english – especially in a corporate environment. Constant communication is the only way to keep a misunderstanding from festering into a full-blown crisis.
Rule 5 – Pretend you are a doctor and have taken the Hippocratic oath – first do no harm. Don’t change anything until you have learned the landscape of the new company. I know successful US executives have a penchant for action – but this is a case where early action can be disastrous. Understand that it will probably take a year until the company is more or less integrated. Maybe I should have put this rule first.
Rule 6 – Get help. Try to find someone that has some experience in these types of mergers and get them to help. It will keep you from having to learn only from your own mistakes.
Rule 7 – visit early, visit often. Make sure that the new company gets to know you and your team. Make sure that you get to know them.
Rule 8 – remember that the company acquired is different than your own, with their own unique culture. That is probably one of the reasons you acquired them – figure how to work within that culture without breaking things too badly.
Rules 9, 10 – Make sure you remember why you did the transaction. Sometimes in the grind of the day-to-day and with executives switching in and out of roles – the actual strategic reasons for the acquisition are lost. Make sure you keep that knowledge alive, and use it to help with the day-to-day decisions.
Now for the startup side of the acquisition. First understand that even if the company acquiring you has done this before – it was probably by a different group of people. It may have even been in a different country. Cut them some slack – they probably mean well, but they are learning too. Don’t assume that they can tell you what to do (or that they know), they are looking as much for input from you as you are from them.
Make sure you know how things are decided in your new company, and how to influence decisions. Delegate roles and responsibilities among yourselves so that you can have different routes of communication back to HQ. Go visit them at HQ and be on the lookout to see who has real influence and power. Assume that things will be hard in the beginning, but there are real benefits to being part of a larger corporation – budgets are larger, career opportunities are greater and you can make a big difference. Find some advocates for you at HQ, or send some.
Finally – and most important – make sure there is a headquarters SPOC (Single Point of Contact) for any decision concerning the remote location – for any decision that comes out of HQ that is not day-to-day business as usual. Someone who cares about the over health and well-being of the lab, even for things that don’t directly effect them, or their department. This is especially true if the remote location consists of a conglomeration of smallish groups reporting to different HQ functions. Otherwise, the different HQ departments will try to optimize things for their own group – but these local optimizations can a have a huge impact on the overall health of the lab – which won’t be noticed until it is too late (unless their is a SPOC).
For example, two HQ departments could decide to streamline their organizations and remove some positions – for example each decides to remove one person in the remote location. Even though each decision on its own makes sense – taken together it could have a very negative effect on the remote location – lowering moral and motivation. Cleaning up the fallout could take months….
So make sure you have a SPOC. Live long and prosper!