Merging a business into your own is like rebuilding a plane while in flight. Here’s how to keep flying.
Acquiring other companies can be a great strategy to grow your company. It can help expand your product, team, market share, revenue, or geographic presence. Having overseen a number of acquisitions in my career, I've learned that it's just as much art as it is science, and the devil is in the details.
I recently spent more than a year integrating Fox Audience Network, an advertising technology company we at the Rubicon Project acquired from News Corporation. This purchase was particularly complicated because it doubled the size of the company and involved a lot of technology, product, and business process integration. I needed to merge the culture of a start-up with the culture of a large, public company subsidiary.
Along the way I learned a lot about what's important when you acquire and merge another business into your own. Here I summarize it into what I call the six Ps:
- People: People will make or break the success of your acquisition. This is the first task you should pay utmost attention to. Sit down with each member of your team (individually, if possible) and ask them all what they're worried about. Most people fear change. If you address their concerns early, they will get past them and get focused.
- Plan: Develop a clear but flexible plan for the integration. Define your top three goals. Set expectations that the plan will change as the company learns about new challenges and opportunities.
- Personal: I cannot stress this one enough. Keep in mind that change is personal for people. The first thing most people think about is, "How does this acquisition affect me?" It may alter their career path, their teammates, who they report to, their role, and they may feel like they need to prove themselves all over again. Expect the unexpected. I was blindsided when I asked someone what he was most worried about. He answered with, "My wife is being induced for labor on Friday. Our insurance is changing on Thursday and our doctor is not covered in the new plan. I'm worried that we have to switch doctors to deliver our baby."
- Partition: Take the team(s) that are critical to executing your core business and keep them separate for at least 90 days. Keep them 100% focused on your core business. The company needs a strong pillar. The rest of the staff will be spending energy on things that are not delivering value in the first 90 days, like these: "Where’s the bathroom?" "My computer doesn’t work." "How do I submit expense reports?"
- Perception: If you were remodeling your house, you wouldn't have a party until you were done, right? Doing an acquisition is like remodeling your house while you're living in it. Explain this to your team upfront. Set expectations. Let them know it's going to be like ripping out the kitchen, bathrooms, walls, and floors. Turn off your public relations. Don't shine a light on your mess. Wait until it's done and then throw the party and invite everyone into your newly-remodeled house.
- Perseverance: There's one thing I can guarantee: It's going to suck. You and your team are going to have doubts, get tired, and become frustrated. That's normal. Keep fighting, remembering, and reminding why you did the acquisition in the first place, and keep going.
Even the largest companies with the most talented merger experts fail at executing acquisitions. It's even more difficult for small companies that have more riding on staying focused. Integrating an acquisition is complicated, but stay the course, pay attention to the details, and keep at it. When you succeed, it will be worth it.