Making Haste Slowly

roughwaterMy experience with acquisitive companies is that they suffer from a few common mistakes.

Too little effort determining what fits (process),

Too little attention to the non-financial audit (people), &

Making a square peg fit into the round hole (egos).

This explains why the failure rate of most acquisitive companies is real and deserved.  In practice, retaining the best and the brightest talent demands meaningful communication and genuine effort.

The smartest folks have options and they know it.

Acquisitions are disruptive at the most personal level & poor communication or boneheaded ego driven decision making takes the finest people you were fortunate enough to engage through the merger & sends them next door where they will inflict pain instead of gain for your efforts.

That’s where a good deal of the red comes from the article below.

Pointers to avoid unnecessary pain;

Go softly when you are not certain (learning what “is” takes tremendous insight/discernment & sometimes there are no right answers; don’t wreck it when you don’t know).

If you do not have a history of excellent company-wide communication, pay someone that can make it happen (you will find it hard to make their cost more than a rounding error when considering the cost of failure).

And finally, don’t let the selling group off the hook in the first few years.  All transactions are stakeholder deals.  No stake, no deal.  Too many transactions fail because there was no motivation on the seller’s side to save people/customers/vendors.

My best example of this sort of giant mistake was a semi-retired owner of a very successful MN manufacturing plant that was willing to shaft his key man.  Instead of bringing the key man recognition for his years of service, the owner kept him out of the transaction information loop.  But the key man found out.

The buying group was fortunate to have discovered before the transaction closed that this key man had accepted a position with a primary competitor and in fact the target company failed within 2 years because of it.  This could have been a catastrophic failure for an acquiring entity.  Lucky for them they did their non-financial audit.

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One thought on “Making Haste Slowly

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  1. Mike,
    So much M&A activity does hit the rocks or take years longer for the reasons that you cite.
    For example: Finance predicts wonderful cost reductions that don’t materialize because they ignore the People assets and the uncertainty of the aquisition.
    The People assets can be understood by assessing the two company Cultures (especially the aquiring firm’s culture). The Leadership Team then has a map to achieve the expected synergies of the two firms.
    Otherwise, beware the rocks!

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