How Not to Screw Up an Acquisition
M&A in the translation industry is red hot. There are tons of deals happening and there is a lot of press coverage on who bought who for how much. There isn’t a lot of talk, however, on how these deals effect the ecosystem. For me the ecosystem is made up of the clients, the suppliers and employees of the companies involved in these deals. I will be doing a series of blog posts to explore, why acquisitions happen, how they go wrong and how to do them right.
Avoiding the pitfalls of acquisitions
So far I have discussed why acquisitions happen and what can go wrong. This time, let’s get positive and try to identify what you need to do to do it right!
Allow me to start off by sharing a gem of a story from an industry colleague who had been through a poorly managed acquisition and who has been kind enough to share his story with me.
Everyone in the company was very excited by the fact that this larger company was going to be a key corner stone to every one’s future success. Everyone was excited by the prospect of future career progression and having a major footprint in the localization industry. Besides better compensation and benefits the new owners were also seen to be prepared to invest in the company, things like new computers and office chairs were on the agenda from the word go. Excitement all around. Career prospect were looking good.
In the intervening period, the management in their wisdom appointed a US based Operations Director to the European office. He would relocate to Europe for a period to sort things out. He was known as a sort of Mr. Wolf (Pulp Fiction) character in the company, basically a Mr. Fix It. His first decision was to bring in some new people to deal with all the PM backlog of work that had begun to stack up. He flew about 7 or 8 people from the US office to Europe over one weekend. I recall arriving at work one Monday morning and met with a whole bunch of new people around the office. These were not PMs with our vertical experience. Some of them hadn’t worked as PMs at all. Needless to say, that didn’t work out and they eventually flew back home after several weeks as they just added to the chaos. Mr. Wolf lasted around 6 months and his successor also only last 6 months. You can imagine the damage done over this period of time.
Now Argos is only a mid-sized player and I personally have only completed two successful acquisitions and integrations, but here’s my crazy complex take on successfully integrating a company post acquisition.
Have a plan. Tell people about your plan. Then execute your plan!
What, that’s it? Yep!
Typical issues you will have to address in your plan include:
- Key employee lock in. Have you identified who the key employees are (absolutely can’t lose them) in the company you are acquiring? What are you doing to make sure they are locked in and not going anywhere.
- What’s in it for me? You have to be able to answer this question from the client perspective. Why should they care that this deal happened? Lay out the benefits. Is it local PM support? Is it better experience/technology? They expect that they are going to receive the same quality service so selling them that as a benefit doesn’t make any sense. They need to get more!
- Redundancies. Is there overlap? Will you have to let people go? Identify ASAP and cut once and move on. You have to be able to say you made adjustments you had to make and now its over. If it happens in drips and drabs everyone will feel at risk.
- Supplier strategy. As we mentioned in the last blog post, you can’t be changing suppliers on the client (especially for cost savings). Will you centralize purchasing? Merge databases? How? You need to have a clear plan here for PMs, clients and suppliers!
- Workflow Systems. In most cases there will be two workflow systems or TMSes being used. You need to choose one and figure out a sunset plan for the other one. Are there developers? What are they going to do? Who will they report to?
- Financial Systems. Will you be centralizing invoicing and finances? Make sure you have a plan on how to make it work. You have to be able to invoice clients. You don’t want cash flow problems after an acquisition! Also, get it right, you don’t want to be irritating the clients of the company you just acquired!
- Name changes, branding, marketing. Are you going to change the name immediately, sunset it over a period of time or maintain a separate brand. Connected to this are business cards, email addresses access to intranet, client portals. There are pros and cons to all scenarios. Make a decision at the get go and stick with it!
At the end of the day your plan should be about creating a better company for everybody involved. Employees should have better development opportunities and more secure jobs. Suppliers should have the potential to increase their billing now that you are a larger company. Clients need to understand what benefits this acquisition brings to them. Do they have better technology, time zone coverage, or a larger pool of experienced translators?
When your employees, clients and suppliers see that you have a plan they will buy into it. But of course that plan needs to be properly communicated to them…
You need to communicate EVERYTHING
- “Here’s what you can expect…” With employees you need to be very transparent about all the changes you want to make and what timeframe you want to make them in. If you had to let people go let them know its over.
- Produce a 30–60–90 plan. Show employees what you plan on accomplishing over the 30–60–90 day milestones and have company presentations to show how far you have come at each milestone.
- Communicate throughout the ecosystem. Communication is not only for employees. Its for clients and suppliers as well. Share as much as you can about what you are doing and why.
- Little secret. Unfortunately, no matter what you say everybody thinks they are going to be fired. Even the best people. Having a senior manager available to support local management onsite is key. In addition, regular communication, one on ones between the employees of the acquired company and senior management is critical to creating goodwill and trust. Ultimately only time cures this. As each day, week and month goes by and people see that you are sticking to your plan, the more they will believe that things are truly stable.
See? It’s as simple as that!
Typically, the first and only communication to employees and clients is “stay calm, this is a good thing,” And the communication ends there! Communication is king! Take is seriously!