Your current method of acquiring new customers isn't the only way to grow your small business. Acquiring or merging with a like-kind company can create opportunities for small companies to accelerate their growth. And, no, this method is not just for the big guys, small businesses can produce serious results with a calculated acquisition strategy.
Recently, Caliber Corporate Advisers, a New York-based marketing and public relations firm, announced its acquisition of Leverage PR, an Austin-based marketing and public relations firm. I asked Caliber Corporate Advisers Founder & CEO, Harvey Hudes, and Leverage PR Principal, Joy Schoffler, to weigh in with their advice to fellow small businesses looking for that perfect acquisition partner.
Here are the five steps they recommend for ensuring a deal is a win for clients, employees, and both companies involved.
1. Get to know your future partner.
Hudes and Schoffler first met in 2015 at an annual industry conference. "We realized we were working in the same industry space, running similar businesses around the same size that we'd both founded back in 2010. We were essentially competitors that didn't know one another. So, we decided to become allies," said Hudes. Schoffler and Hudes signed an NDA and began discussing information with one another about their businesses. "We shared a lot," said Schoffler. "More than you would typically disclose with a competitor. But because of that, we established a very high level of trust. It also resulted in opportunities for joint client work--we'd bring in Caliber for projects when we needed a larger east coast footprint, for instance. In being business partners first, we really got to know one another's teams and how to work well together before we ever broached the topic of acquisition."
2. Choose the right timing.
Acquisition discussions between the companies began in earnest early December of last year. Schoffler recognized that though Leverage PR had an established track record of producing great results for clients, there were certain limitations about remaining an Austin-based boutique PR firm that hindered its growth. "I realized that with a bigger geographical footprint, the opportunities we could offer both employees and clients would make us even more competitive in the market," said Schoffler. And, although we had established media contacts in the nation's larger cities, the geographical gap between Austin and major media hubs kept those connections from becoming as close-knit as they could have been. I began to see that lack of ground presence as something holding us back. So, I made a leap--it was time."
3. Define the plan in excruciating detail, then define it some more.
"The real work begins after you sign the dotted line," said Schoffler. "Making sure your road map is sound prior to that point is the only way to be certain the deal will accomplish what you want, and what your business partner wants. Err on over-definition and over-explanation." Hudes concurred, saying "It's really important to ask every question you can think of, and then even the ones you can't. Really dig into what you're both envisioning from the acquisition and put that down on paper."
4. Make introductions fast for a smooth transition.
Hudes realized it was crucial to ease concerns about the change of ownership from the get-go. "I wanted to get to know the Leverage PR team right way, so I met everyone at Leverage PR immediately after the acquisition had been announced internally." said Hudes. We were available to answer questions on day one, and we've kept the lines of communication open by establishing weekly team meetings as well as one-on-ones. I think it's made a huge difference in bringing the two teams together."
5. Realize your role has been redefined, whether you're the acquirer or acquiree.
"Taking a step back from a principal role to one of a senior member of the team has been an adjustment," said Schoffler. "Learning where to step in and where to step back is a bit of a dance. It's key to the new business's success that I get the balance right, so it's been a high point of focus, and will continue to be in the months to come." The challenge of change extended to Hudes as well. "Gaining an additional seven team members is exciting, especially for our clients who will benefit from the added value of an even deeper bench of industry experts in their corner." Hudes said. "But it also requires investing extra time to ensure I establish strong professional relationships with our new employees so that I can empower them to do their best work."
Whether you are looking for a profitable exit strategy or a rapid growth strategy, there are many strong arguments supporting M&A. Whichever side of the table you're at, do your homework, talk to M&A experts, and take your time executing the deal.