Your hard work, financial sacrifice, and struggle to get your company off the ground has finally paid off. A large company has offered a substantial sum to acquire your company, and you've happily accepted. You're especially pleased that they say they want to keep you and your team running that company, just as you did before.
When the celebration's over and you return to your office--or to your new digs at your new parent company--you'll be facing a new set of challenges. How you handle those challenges, and the choices you make, will determine whether you continue happily on as a division of the larger firm, or wind up struggling with ongoing frustration.
When it comes to handling life as a newly acquired company, Jeff Erramouspe can offer some great advice. He's CEO of Spanning Cloud Apps, a cloud-to-cloud backup platform that was acquired by tech behemoth EMC in October. Having successfully managed the transition, he shared some tips that every recently acquired company should consider following:
1. Understand why it's a good deal for them.
"One of the most important steps you can take--before you close the deal--is to truly understand why you're being acquired," he advises. Ask exactly how your company's new owner will measure the success of its acquisition. "This will guide your priorities during the integration process," Erramouspe explains. "Are you being bought for your revenue stream? Then you better have a laser focus on making your sales numbers. Is it a technology buy? In that case, do everything you can to keep your development team."
In this case, EMC--traditionally an on-site storage company--bought Spanning for its cloud storage smarts. "They're trying to move into cloud infrastructure," he says.
2. Understand why it's a good deal for you.
There should be a reason it's a good direction for your company, beyond your personal payout. In this case, although Spanning was still six months from its next funding round, the deal provided leverage in the marketplace just when the company needed it. "I looked at what we needed to accomplish in the market and how we competed with our primary competitors and realized how the risks would be reduced as part of EMC," Erramouspe recalls. "We would have the EMC sales force, which has been described as a force of nature. We would have the EMC megaphone. Those things would give us a strong advantage over competitors. And what made it easy was that they wanted us to continue operating as Spanning."
3. Make sure to retain your own culture.
Chances are, it's your culture that made you an attractive acquisition target in the first place, Erramouspe notes. So before the deal closes, make sure you'll be able to retain the things that create that culture. Don't just accept blanket assurances that you'll be able to remain the same--ask specific questions about what will and will not change. "Will they want you to move out of that cool space into a local office that is a cube farm?"
In Spanning's case, not only did the company remain in its offices, it was able to maintain many of the perks and traditions that made it a great place to work. "We still have the company mean every Friday," Erramouspe says. "We have a large open space and we put out tables and the company eats together. We had nice plans for a holiday party and everyone was afraid we'd have to change that but we didn't. And we didn't have to take the beer out of our fridge."
4. Don't lose focus on your own business.
"Don't get sucked into big company politics," Erramouspe says. "Pay attention to the relationships you've built with customers, partners, analysts, prospects, and journalists."
As a separate business unit within EMC, he adds, Spanning still has revenue numbers it needs to achieve. "It would be really easy to lose sight of the things we need to get out the door and start engaging with EMC instead," he says. "It would be really easy to think, 'I've got to start looking for my next spot.'"
5. Learn which offers of help are actually helpful.
"Getting acquired by a large company will give you lots of opportunities for leverage," Erramouspe says. "As a leader, it's your job to find these leverage points and guide your team to take full advantage of them. You will also have a lot of new 'friends' who will call and offer 'help.' Most of these offers will only result in interference and unproductive work. Protect your team and support them when they say no."
What kinds of "help" are actually unhelpful? Someone might call from purchasing and say that they need to come do a thorough review of your purchasing process and make sure you're part of the larger company's system, Erramouspe explains. Or they may want you to go into a new market when doing so would require huge changes that don't make sense for you. In these situations, it helps to have an advocate within the acquiring company, he adds. "I have people at EMC who've told me that if I run into something that doesn't make sense for us, to let them know and they'll provide air cover."
6. Figure out what your job is now.
Erramouspe is proud of the fact that for the developers at Spanning, little has changed since the acquisition. On the other hand, he says, "As CEO, your job will change the most."
The time right after the acquisition was disorienting for him. Many of the cash flow issues that had worried him on a daily basis were no longer worries. At the same time, such previously simple matters as giving an employee a promotion and a raise now required various levels of approval. For a while he felt at sea, not certain exactly what his job should consist of. Eventually, though, he realized where his new focus should lie--on doing things that would ensure Spanning's acquisition was a success for all concerned.
He realized there were three things he had to do to make that happen. The first was to get deeply involved in the sales process and start working with EMC's sales team. The second--since EMC bought Spanning for its cloud knowledge--was to communicate as much of that knowledge as possible to others at EMC. And the third was to work with his employees to help them separate useful assistance from interference and protect them from the latter. "Now that I know my mission, I know exactly what I need to do every day," he says.