Whilst organic growth may take some time, growth through mergers and acquisitions can provide a successful way to amplify growth rapidly in terms of both staff and client base.
Sounds like a no-brainer to hunt down those competitors who are looking for a way out, and to take over their company. But mergers and acquisitions aren’t always easy sailing.
Ensure the retiring partner still has an interest in the business
While a walk-in, walk-out transaction sounds like it would be the easiest option, it can in fact turn out to be a nightmare. If the retiring partner has mentally checked out of the business prior to sale, the execution of hand-over can suffer. Often, employing the existing partner for at least the first 12 months following the transaction works significantly better and allows for greater continuity for the clients, as well as the existing staff.
Sometimes the retiring partner may have been trying to exit for some time and thus not been providing their clients with customer services levels you would expect. It is very hard to win the clients over as they are already looking elsewhere and might as well change.
Business owners who are looking for a succession plan for genuine reasons, such as retirements, or location changes, but still want to see the business succeed, are more likely to continue the relationship with the client and offer them great service, which helps ensure a seamless transition.
Look for similar systems
Ensure they operate with similar systems and procedures as much as possible. For example, if you offer fixed billing and they use timesheets, it is difficult to roll out this new way of billing to their existing clients.
You run the risk of losing clients who may not be happy with being switched over, which reduces the value of the merger straight away.
It’s important to minimise the number of changes you make upfront, so as not to disgruntle clients and staff.
Same with accounting systems and workflow products. If you only use Xero and merge with a firm that solely uses MYOB for example, clients need to be migrated over to the new platform which may prove to be too much of a change for some after years of using a certain system that works well for them.
Choose location wisely
Do not try and span a distance that is too great geographically or else clients and staff will feel unloved and that it’s too far. Whilst cloud-technology allows all work to be completed from any location, on any device, nothing beats face-to-face interaction, so it’s important that the office location is still within reach for clients.
It helps to instil faith in clients that they are still valued and that you’re close-by if need be. It’s important to be able to offer quarterly/monthly catch-ups with clients to gain some great insights and feedback from them, and that often doesn’t happen if the communication is only over email.
It’s important not to disregard the value of personal interactions with clients, so try to ensure the office is in close proximity to your client base to help achieve this.
Happy staff = happy business
When merging or acquiring a business, the staff are the greatest asset that you are bringing over, so ensure they are the right fit for your company.
Ask a lot of questions regarding their values to help understand if they will be a good fit to transition into your existing business.
Culture is a big deal within certain companies, so if you have a strong culture, there’s no point merging with a company and taking on their staff if they are the complete opposite of your existing staff base. It may result in conflict between staff members, which can only be a negative thing, and may come to the point of affecting the service clients are receiving.
Ensure you dedicate time to getting to know the new staff members. It’s a big thing for them when their place of employment is being taken over, so spend time re-assuring them that the merger is a positive venture and outline the benefits they’ll experience.
Have a proven roll-out plan in place
The saying failing to prepare is preparing to fail rings true when it comes to acquisitions. Planning is crucial, and having a solid roll-out plan right from the beginning helps build trust and shows that you know what you’re doing.
This plan should include allocating time to spend with staff, contacting all clients to introduce yourself, and having set stages to implement any required changes.
Whilst you may be eager to get to work straight away with getting your systems and procedures in place with the acquired business, it’s not effective to make sudden changes, so ensure this is gradual.
A great way to meet clients is to organise a sundowner. It’s effective in providing a casual environment to introduce yourself and the company, and give clients the opportunity to ask any questions or express any concerns they may have. On top of that, it’s the perfect opportunity to promote any additional services your business may be able to offer them.
Ensure everything is documented
Ensure everything is documented and a full assets register is included in the contract. You don’t want to be stuck with additional costs, so draw up a contract and go through it with a fine-tooth comb.
Each merger or acquisition will be different, but the key is to have a procedure in place, but allow for flexibility where needed.