Buying a business is an intensive process. But the reality is after you've purchased the business, the real work begins: integration.
Every acquisition requires integration, although the degree of it depends on your strategic goals. If your goal is to expand your position in the supply chain and therefore you are acquiring a supplier, it is quite defensible to let the acquired company continue to operate standalone. However, certain things will still be integrated, especially where staff functions such as finance and HR are concerned. In turn, this often has implications for IT systems.
A buyer looking to increase market share and acquire a competitor for that reason is more likely to choose to fully integrate. Such integration is much more intensive and requires even better preparation. Thus, the degree of integration varies from case to case.
If you communicate nothing and spend the first three months in hiding to work out your plans in detail, the momentum is gone. The opportunities for change are then a lot more limited.
'Buying a business is not that exciting anymore, the process is always the same,' says entrepreneur Guus van der Borgt of Interhal. 'The hardest part is the integration. I once bought a business with twelve people. The company was located an hour's drive from here. I wanted to toe synergy, closed the branch there and transferred everything here. Five months later there was only one employee left. It eventually turned out well, but in hindsight you sometimes think: would it not have been better to leave it stand-alone?
Leverage the momentum
On closing day, you must communicate. You are the new owner, get on that soapbox and tell your employees about your vision for the new organization. Outline your plans and tell them if they need to be worked out in more detail (which is usually the case). People know how things work in a merger or acquisition; they're not crazy. They are going to wonder all sorts of things, and they are not the most positive ones. Are branches going to close? Are people going to have to leave? Will I keep my job, my position? Will I keep my salary? Those kinds of things are better addressed immediately.
If you know that out of 10 branches, three are going to close, name it. Even if you don't yet know exactly which three they are. You can say, for example, that this will be absorbed as much as possible through natural wastage and that people who fall by the wayside will be guided to other work. Of course this news causes unrest, but if you say nothing or answer questions evasively, the unrest is there too. And then it might be bigger, too. At least now people know that seven branches do stay open. Make sure you don't get tempted to make promises you can't keep later. Build in the necessary caveats.
'On Day 1, everyone expects a vision, a message,' says integration expert Evert Oosterhuis. 'That can be with or against, but people are generally willing to be open to that and go along with the change. If you communicate nothing and go into hiding for the first three months to work out your plans in detail, the momentum is gone. The thought among employees is: we hear nothing, apparently nothing will change. The opportunities for change are then immediately a lot more limited.'
Integration begins before closing
It's often said: don't get ahead of yourself. Don't change everything right away, but first get to know the purchased company better. It's good advice, but of course it doesn't mean you should sit still for that time. On the contrary. During due diligence, you have already identified the possible integration risks. That helps you prepare the integration as well as possible. Then you work out the integration plan. When drawing up this plan, it is about both value retention (think of retaining key employees) and value creation (synergy benefits). In addition, the plans must align with the strategic goals of the acquisition, be feasible and take into account the people and culture within the organization.
According to this methodology, you go through all functions: production, marketing, sales, purchasing, logistics, IT, finance, HR, et cetera. For example, what do you do with the IT systems? Are systems allowed to coexist, do you opt for best practices, or does the purchased business switch entirely to the buyer's systems? Will all branches remain open or will branches be closed? Will departments be merged and jobs lost in the process? What happens to the terms of employment: will they be harmonized or not?
Often, staff is shifted around. Think about when you are going to appoint people to new positions and based on what criteria? What will you do with prices, contracts and terms of delivery to customers? Will they remain as they are or will they be harmonized? Will you keep all suppliers or will you set certain criteria for them, such as minimum size or quality standards? Discuss all parts that are relevant. What do you want and what don't you want?
Therefore, if these principles are clear at closing, you know what you can communicate on Day 1. Had you not done this exercise - and thought you wanted to spend the first hundred days figuring this out at your leisure - then you would not have had clear plans and you would have lost the momentum to get stakeholders on board.
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