By: Robert Few, The Connection Xchange
Acquisitions and mergers abound! It feels like every day I am reading about a new acquisition, merger, or another company which is being listed for sale by one broker or another. It’s an amazing time to be in our industry. That also means that many of you are looking to grow through acquisitions.
Whether you are buying a local competitor or a company to open a new market. Whether you paid cash, took out a loan, or were fortunate to work out the option to earn out. The first day after the closing, you are all in the same place. What now?
After buying an existing company, there are several key actions and items that you immediately need to get a handle on to ensure a smooth transition and to start managing the business effectively. Here are a few areas you will need to focus on throughout the due diligence and post-closing period:
Records and Documents:
- Legal: Work with your attorney to obtain all legal documentation related to the purchase of the company, including the sales agreement, transfer of ownership documents, and any other legal contracts. Ensure everything has been completed and no loose ends are left.
- Financial: Collect and review the financial records of the company, including balance sheets, profit and loss statements, tax returns, and any outstanding debts or liabilities. This is less important if this was an asset purchase agreement.
- Operational: Collect and review any standard operating procedures, inventory records, supplier contracts, and customer databases and align with your own supporting documentation.
- Regulatory & Compliance: Ensure that the company is compliant with all relevant regulations and licenses in the industry and operating area. Additionally, address any outstanding issues promptly, including transferring of license holder/qualifier information, if appropriate.
Employees:
- Gather information about the company’s employees, including contracts, salaries, benefits, and any key personnel that are crucial to the operations.
- Consider sending an initial survey and conducting 360 interviews with at least the key players if not the entire staff. Encourage open feedback from the employees about their experiences during the merger. Address any issues promptly and take constructive feedback into consideration to make improvements. Listen to your team and work hard to build trust and a positive rapport out of the gate.
- Foster a unified company culture. Work on blending the cultures of both companies into a cohesive and inclusive new culture. Emphasize shared values, respect for diversity, and create opportunities for team building and collaboration.
- Identify key employees and customers that are crucial to the success of the merged entity and develop retention strategies to keep them engaged and loyal to the new organization.
- Provide training programs for employees to help them understand the new company structure, processes, and values.
IT Systems and Access:
- Make sure you have access to the company’s IT systems, including passwords, accounts, and any necessary software licenses.
- Ensure all security and certificates are up to date.
- Be sure to increase cyber insurance to cover both companies. Ensure your entire team goes through required and updated cyber security training. Companies involved in acquisitions or mergers are easy targets for professional hackers.
Business Planning:
- Review and update the existing business plan to align it with your goals and strategies for the future of the company.
- Inventory and Assets: Take stock of the company’s inventory, equipment, and other assets to ensure that everything is accounted for and in working order.
- Customer and Supplier Contacts: Review customer and supplier contracts, contact information, and any ongoing agreements to maintain relationships and continue operations smoothly.
- Communication Plan: Develop a communication plan to inform employees, customers, suppliers, and other stakeholders about the change in ownership and any upcoming changes or improvements. This plan is crucial to the long-term success of the acquisition for both employees and customers. This should come in the form of a joint letter outlining the handoff from the original ownership to the new company. I would encourage you to communicate openly, transparently, and as often as possible. A successful communication plan is not a one and done plan. To keep both customers and employees informed about the merger process, ensure they understand the benefits, address any concerns, and provide timely updates throughout the transition.
Although most of this can be drafted during the due diligence and negotiation period, it needs to be ready to deploy day one, if not sooner. I recommend working closely with legal, financial, and operational advisors to navigate the process effectively and ensure a successful transition after buying an existing company.
By focusing on communication, training, culture integration, feedback, and retention strategies, you can effectively manage the transition for both customers and employees after a merger.
Do not underestimate calling in support. TCX works with companies on successfully integrating organizations pre- and post-acquisition to ensure that the best of both companies continues to forge forward.
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Source: snnonline.com