We often hear following the exit of a business owner failure stories of how a process went wrong. This is not always the case because of the sensitivity of an acquisition therefore success stories are not written about. Importantly, there is always consideration for the changes that are underway and confidentiality.
Post-acquisition and before exit of the previous owners who are typically on-hand to support the new buyers and should facilitate a smooth transition.
I’d like to share a success story post exit and business acquisition. Investors are looking for an opportunity to improve a newly acquired businesses either for future sale or long-term investment – it would be crazy not to expect this.
The success story I’d like to share was driven by looking at the future goals and checking the existing team structure were aligned for delivery of goals. Personnel was allocated to the task of ensuring clear communication and team interaction at each stage of change as a priority in the post-sale acquisition/exit.
Challenge:There was early recognition that a senior management team could not be created from the level 2 managers (an interim team was in-place to manage the transition). The medium to long term strategy was to create this new leadership team within an agreed budget. A daunting task as the budget was to promote from within and not recruit externally (delaying plans and increasing costs).
So, what happened and why was it a success in the end? We simply spoke to everyone confidentially, shared the vision, strategy and plan whilst understanding their personal position (i.e. time to retirement, career aspirations etc). Taking time out to listen and understand.
By doing this we identified that a number of the team members wished to retire/other. The individuals were comfortable to support the new plans and suggested great ideas. By doing this we were able to upskill some of the management teams, extended the interim (where needed) and recruit a leader (to drive the new way forwards) and all within budget.
Success! Yes, post Exit and Acquisition – it can be done.
Hints and Tips
The first step would always be to review the Financial state of the organisation (using the assumption that financials have already been reviewed prior to sale) when you are in the business there may be things you could not see).
Check also the customers – you will again have spoken to them prior to the sale but look at the contracts, margins and expiry dates (could there be a leaky bath syndrome about to happen i.e. in at the top and out at the bottom).
Understand the price system and work shadow the best sales man/women to see how they position the organisation including price point. (manage this and you will drive sales upwards).
In this success story there are 4 key checks to add into the ‘Action Plan’
- Communicate early the short, medium plans and ask the teams by each level what they would like to see change (anonymously) – understand why?
- Consider the structure and capabilities of the team to see if anyone is ready to take the next level promotion (they know how the business works)
- Important to set new parameters of control (approval levels, who to go to etc) if I am working in an organisation I understand these first as it can be confusing with all of the changes. (check who is the person to go-to and they will support communication)
- Create a challenges and opportunities list and prioritise it – there may be some quick wins here to either improve the organisational teams support for future change (working together) or revenue streams (the previous owners may have lost focus or not allocated enough time).
Author: Kathryn Orange working with SME leaders and Investors that are looking for business improvements/growth and/or have acquired businesses.