After you’ve done the acquisition deal, don’t think that all the hard work is over. Successfully merging each business is the next hurdle.
Last week we looked at why acquisition is a great way to expand a business, and what businesses need to get right in the process. One of the key issues was the ability to successfully merge the acquisition into your existing business – which is what we will deal with this week.
There are five key areas to get right:
Leadership
In privately owned businesses, the leadership is usually driven by the owner, particularly when they play an active role in the running of the business. In preparing for the acquisition you need to assess the role of the owner, and how you are going to deal with this once you have bought the business. Do you want them to stay on for a period of time, and if so what does this do to the timing of any changes you want to make? If they are to leave immediately how are you going to fill the void?
Systems
While in today’s world this usually relates to IT systems, it also concerns the various internal procedures and methodologies. You need to assess how these systems compare to your own systems, and what you are going to do with them after the purchase. Again cost and timing need to be considered as part of the equation, including training. You may also look at this as a potential area for future productivity and profitability improvements.
Culture
Every business has its own culture. This will constantly change, and assessing and proactively developing a culture is an art in itself. Something to consider in the purchase is the similarities of the cultures and the possible affects of the acquisition on the culture of the combined entity. If you need to change the culture, then system changes can be an excellent catalyst.
Customers/suppliers
No business is an island, and its relationships with customers and suppliers needs to be considered as part of the acquisition. Part of this consideration is how you are going to manage their response to the new business, particularly if you intend to change or renegotiate some of the relationships. Some examples of this are product range and payment terms. Again this is a potential area of profitability improvement, however it needs to be managed with care.
Efficiency
There is no doubt that a merged entity will have opportunities for efficiency improvements. One of the first to be targeted is in finance and administration. A word of caution here – if the owner is departing at the time of acquisition, then cleaning out finance and admin too quickly could leave you very much in the dark. It is often prudent to double up for a short time and then keep the best person for the position regardless of history.
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Smart Company is a sister publication to The Mandarin, catering to Australia’s entrepreneurs, small and medium business owners and business managers.
