Come Together: Secrets to a Successful Merger

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In April 2020, Rob Douglas, president and CEO of security-focused software firm bioconnect, Got a feeling. The company had been growing steadily for a decade, but to really scale up Bioconnect had to start acquiring other companies. But which one? Douglas was looking for a company with complementary technology that would serve users that Bioconnect had not already reached. Also, it required a similar workplace culture.

That last point is particularly important. A team with similar core values ​​is easier to integrate, ensuring the deal’s long-term success, says Daniel Charney, a people and culture specialist and an executive in residence. Mars planetAn innovation hub in Toronto.

“If there’s a culture clash, it disrupts the business, and you don’t get the value you thought you would,” says Charney. “Having two teams with different rules about how you operate is not going to result in a stronger performance.”

Illustration: Monica Guan

In fact, lack of cultural integration is a common factor in merger failure, Douglas says. “Without a focus on cultural alignment, there is a high probability that the business case for buying the company will not be realized, shareholders will not receive the returns they are looking for and employees will become disgruntled and eventually leave.”

Here’s how to avoid such a costly mistake.

Choose companies with similar values

Make culture a priority from the start. At BioConnect, Douglas determined that the ideal acquisition was MedixSafe, based in Memphis, Tenn., which makes secure storage equipment for medical and emergency services. From the outset, he engaged openly with MedixSafe’s leadership to learn how invested they are in the company, employees and customers. Bioconnect also conducted a detailed review of MedixSafe’s digital assets, including its website, videos, blog and customer references, which helped validate the information.

“As you learn about their values, you can assess what the company’s core DNA is, and whether it is in line with your own company culture,” says Douglas. For example, he was pleased to note that MedixSafe shares its focus on customer success and a similar approach to solving challenges.

Gather as much information as possible about the company’s mission, vision and values, as well as employee sentiment. this is the team at waterloo axonize The company did it after acquiring employee communications startup Nudge, says Andrea Vrbanac, vice president of people and culture. As soon as the acquisition was announced in 2022, Axonify distributed employee engagement surveys and conducted focus groups to understand how employees were feeling and what their biggest concerns were, allowing leadership to prioritize actions during the integration process Giving helped.

Illustration: Monica Guan

The acquisition paid off: Axonify was able to increase its workforce by 25 percent, which allowed the company to scale its operations.

Be intentional about merging the processes of both companies

Cultural integration isn’t just about values, says Charney, who advises companies at MARS. Speed Programs on attracting and retaining talent. It is important for the buyer to find out how things actually work in the company they are acquiring and enlist the help of their leadership in documenting those processes. This outfit goes way beyond the charts; This means changing how communication happens, how teams collaborate and even how vacation time works.

The documentation process also encourages workers to think about improvements and new approaches, says Charney. “It’s time for reflection and codification, so that everyone can see whether these things are going to cause friction, or if they are actually complementary.”

Both companies should be compared side-by-side on all key practices including learning and development, rewards and recognition.

“You want to integrate practice over time, but be sensitive to the familiar,” she says. “Before making any changes, the acquirer should interview top talent and understand what motivates them and what they want to preserve about their former company.”

Appoint an Integration Manager

Douglas credits MedixSafe’s successful acquisition of BioConnect to careful planning. Since the acquisition, Bioconnect has been growing over 100 percent annually. In fact, the company is currently making two other acquisitions, and intends to continue acquiring companies at a rate of one or two a year for the next three to five years. Part of that success was due to the fact that there was one person in charge of the process. “Someone needs to step out of their role full-time and do nothing,” says Douglas.

That person was Jeff Crews at Bioconnect. He was responsible for the creation of the integration playbook, which included everything from how the company would communicate with employees on the day it was planned to move to specific milestones previously set for 30, 60 and 90. as well as how to onboard new employees, partners and customers. Day.

Importantly, that playbook was developed while the talks were underway. “A successful acquisition begins with a clear, documented plan Earlier You’re really close,” explains Crews. Throughout the process they prioritized three main themes: communication to all relevant stakeholders, integration and continuity to meet financial objectives.

Communicate clearly what is changing and what is not

Employees of both companies often experience great stress during acquisitions, and would like to know two things: What is changing and what is the same? Tell them as much as possible.

“People want answers and certainty,” says Marg Wiley, who worked at Nudge before its acquisition by Axonify and is now director of the people and culture team. “But sometimes you don’t have answers right away. You’re still working out the finer details: How do payroll, benefits and even email addresses change?”

It is important to keep up the communication in the days, weeks and sometimes even months after the deal has closed. For example, Axonify leveraged its existing employee engagement tools, including its internal podcast, which produced a special episode that introduced new team members. The company also holds bi-weekly Ask Me Anything sessions, where team members can anonymously submit questions to address to leadership. It turned out to be a great way, says Wiley, for “nudders” to see Exonify’s culture of transparency and integrity. This goes a long way towards reducing employee stress and uncertainty.

be patient

Don’t rush the process. “When it comes to culture, it takes time to develop trust,” Wiley says.

Axonify’s leaders became role models of the company’s culture, asking new employees how things were going and asking what was needed, a strategy Wiley found particularly effective. “I came from a small company where I felt really connected to every single person, and suddenly I was at a company three times the size. But it was reassuring to see that they were making sure I felt connected. I have been

stay flexible

Crews says that if companies are not sensitive to the level of disruption, they may interfere with their own operations at a time when they can least afford to do so. “Demonstrating financial performance during the business continuity and integration phase is absolutely critical,” he says. “Ultimately, you need to prove the business case.”

For example, Bioconnect has an entire onboarding process designed to reinforce the company’s culture. But during the acquisition, it quickly became clear how many employees could go through the time-intensive process without impacting customers, so Crew slowed the onboarding.

“Building relationships takes time, so it is important not to rush the process. You must be genuine in your interactions and build trust,” says Axonify’s Vrbanac, noting that a patient approach pays off. “The company is now poised to grow product offerings, customer support and sales, and we Excited for what’s next.”

The MaRS Momentum Program works with high-growth Canadian companies to accelerate their path to $100 million in revenue. Is Your Business Canada’s Next Anchor Company? Find out more and apply to join Program,

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