Being acquired is both exciting and scary. Entrepreneurs dream of a public company shelling out stock and cash but don't often consider what happens after... until after. That's when concerns about culture, organization and transition kick in.
On a recent episode of my podcast, YPO's 10 Minute Tips from the Top, I had the opportunity to talk to Matt Conlin, founder and president of Fluent LLC, which helps companies acquire new customers online. Fluent was founded in 2010 and grew quickly to more than $100 million with no venture capital investment. The company was recently acquired by the publicly held data analytics firm IDI for $225 million.
Conlin, a member of the Young Presidents' Organization (YPO), was new to the acquisition experience and learned a tremendous amount about the challenges associated with merging one company into another. With more than 80 employees, there was a lot to consider. Here are Conlin's tips for making sure the acquisition is a smooth transition for everyone involved.
1. Decide that being acquired is the best option.
Acquisition is a great option for providing resources for growth, expanding into new markets and taking money off the table. Its innate challenges may not be necessary if your company is immensely profitable on its own. You have to consider losing your autonomy, and how the cultures may or may not fit. Think carefully about the future 3-5 years after acquisition and make sure it lines up with your intended plan.
2. Find a company that allows you to retain your culture.
Conlin expressed concerns about the acquisition altering what his company stood for. Only when he was sure of maintaining Fluent's DNA was he willing to pursue the union. "Let's be honest. We were a profitable business and we could have continued to scale," he reveals. "But one of the major reasons we did this deal was they allowed us to keep our autonomy. They said we were going to keep the management structure in place and that we weren't going to make any changes or fire our core team. And that was important to us. We built a good culture here."
3. Thoroughly investigate the parent company.
It's easy to get starry eyed over big payouts and forget to do your diligence. Conlin did a lot of homework on IDI before agreeing to the deal. Make sure the company is healthy. Explore their philosophy and long-term strategy to be sure their approach fits your goals. Ask to meet executives from previous acquisitions so you have a sense of how things will actually go during transition. Meet with current employees to find out how things really work.
4. Be transparent with employees.
People often struggle to adapt to major change, and the prospect of being acquired by another company can cause fear and uncertainty for employees. Conlin recommends being as transparent as possible with employees during the process so no one is left in the dark about their future. "Right before the announcement was about to be made public, we pulled the team together and made it clear that we were about to be acquired," he stated. Management made themselves easily available to resolve any employee concerns.
5. Set a detailed transition process in place.
Once the announcement is made, the wheels start turning a lot faster than many might anticipate. A detailed plan that covers all employee, client and operational issues is critical to making sure that business continues as usual while executing the necessary changes. Having that plan in place before the announcement will alleviate fears and keep the transition smooth and efficient.
Each week on his podcast, Kevin has conversations with members of the , the world's premiere peer-to-peer organization for chief executives, eligible at age 45 or younger.