I’ve been on both sides of an acquisition over the course of my career. While there is often a lot of discussion on the logistics of the transaction, such as finding the right acquirer, negotiation tactics, whether to do a stock vs. asset sale structure, an important topic is too often ignored: post-acquisition integration.
While it’s important to get a great price and minimize tax implications, most sellers go on to work for the buyers after the transaction is complete. Even if they don’t, many of their employees make that transition. Shouldn’t you give some thought to how this might work?
Let me provide some reassurance. If you’re thinking about this topic, you’re in the minority. My experience is that very few people do. There are so many details to think about during an acquisition that little time is spent on what will happen after the deal is done.
But if you don’t think about these issues, you are already behind. Your staff will expect you to have the answers at the ready. Saying, “We haven’t figured that out yet” will be met with stares that say, “What were you guys talking about all that time then?”
Who is going to report to whom? What jobs will be eliminated? Where will my office be? These are all important questions for your staff. You should be prepared with as many answers as possible.
One of the most important things to think about is your role in the new organization because it will set the tone for everyone else. Will you be an independent entity reporting to the CEO or work under someone else’s management? This really matters to everyone.
Even if your new boss says that you will remain independent, your staff psychologically will like if you somehow remain part of the new organization. But hanging on to all your old cultural traits and identity will likely lead to hard times in the future.
It’s OK for you to act naturally but embrace the new organization, too. I would recommend your doing a bit more than you’re initially comfortable with in this regard, even if it means losing authority over your old team or losing some of your old benefits and traditions.
Have a conversation about this with your new boss before the deal is done. Get his or her thoughts about how you’ll work together and let the person know how you plan to discuss the new scenario with your team.
If you plan to remain independent, ask to be told in advance if this will change. If you’re going to have a new role at the new company, ask if it’s OK to talk to the new CEO if something isn’t working. Setting up an open relationship early on will be important later.
This is especially true if the transaction involves an earnout (money to be paid to you later upon the company’s reaching certain milestones).
You may want a high level of integration within the new company to take advantage of some of the resources the buyer will provide. But if the new management makes decisions that get in the way of your earnout, you’ll want to be able to go to the chief to discuss things.
Finally, worry a lot about the company’s culture before agreeing to the transaction. When two organizations are very different, integration is very difficult. If this seems to be the case, think about whether this the right deal for you and what you can do to alleviate the problems.
Above all, think through the issues and be open and honest with yourself, your new boss and your employees. There are emotional issues tied to selling your business. (It’s your baby, after all.) And really understanding what’s best for all parties is harder than you might initially think.