Acquisitions—How to Have a Successful Integration
Whether you’re the marketing leader of a firm that was just acquired or of the firm that did the acquiring, Jason and Jeff share what you should be thinking about to make sure the integration is successful.
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About the Episode
In this episode, Jason and Jeff discuss what marketing leaders need to be thinking when acquiring a new firm, or when being acquired by another firm, to have a successful integration. And the presumption in this episode is that there’s a good business case for the acquisition.
To start the episode, Jason and Jeff go through a list of things the acquirer should be thinking about post integration.
The second half of the episode they share a list for the marketing leader of the firm that was acquired to be thinking about.
In the end, this episode offers practical, actionable things that the marketing function needs to take ownership of after an acquisition happens.
Resources mentioned in this episode:
When It’s Time to Reinvent the Firm
The BS of PS
Jason Mlicki: Alright, Jeff. The last couple of times we talked, we really had been focusing on building things and destroying things. We did a podcast on how to launch a new service, how to launch a new practice, and then we turned around and did one on how to kill one, so how to assemble something and then how to disassemble something.
Today, I guess we’re going to talk about how to bolt one on. We’re going to talk about acquisitions, so how to integrate another firm into yours after an acquisition. I think we’re going to talk about it from both sides, both the side of the acquirer, so if you’re the marketing leader on the firm that did the acquisition, what to think about, and then we’re going to talk about the other side as the acquired, if you’re the marketing leader or practice leader of the firm that was acquired, some things to think about.
To start us out, I’ve made a list of about six things that the acquirer should be thinking about post acquisition. Now, I’m also going to say that I’m coming into this with the presumption that there’s a good business case for this acquisition. That business case has been vetted, everyone agrees, at least in the leadership team, that the acquisition should be done. Now, we’ve done the deal or we’re in the process of doing the deal. I should say we’re in the process of doing the deal, and now what do we do? We can certainly retrace those steps if we need.
My first thing is, and I’ll tell a story as it relates to this, you need to be prepared as the marketing leader to make sure that clients are going to be contacted immediately once the acquisition is announced, meaning that the day that acquisition happens and it’s public, you better have communications and conversations happening with key accounts within 24 hours. The example I’ll give is as an agency we outsource a good chunk of our human resources delivery mechanisms to a PEO service, a professional employer organization, and we have been with the same sort of regional provider of this service for 10 or 15 years. They got acquired by a firm out of Texas and the acquisition was announced.
It took the firm that did the acquisition almost two months before they made any outward contact to us about what was going on, but within 24 hours of the acquisition being announced, I got sales calls from every major player in the industry. Your competitors are going to be all over this window of opportunity and they’re going to come in and they’re going to shape in the minds of the clients what this means to them before you get the chance, so you better be ready. It was tough, so to me you have to have that value proposition ready to go the moment that thing goes public because you better believe every competitor under the sun is going to use this window to navigate their way into every deal they’ve been working on for years. That’s my first piece of advice.
Jeff McKay: That’s a great piece of advice because these acquisitions, particularly from a marketing perspective or a buyer’s perspective, is how does it impact me? What does it mean to me as a client? Clients aren’t going to care about the acquisition at all in terms of strategic value or stuff like that. They’re going to want to know, like you probably did, how is this going to interrupt my business? The way you described the competitors coming in, they’re trying to sow fear, uncertainty, and doubt. These people aren’t going to be serving you. They’re going to be focused internally on integration. They’re going to be combining systems and their service is really going to suffer. You got to get out in front of that. You’re spot on, spot on.
Jason Mlicki: It was alarming in that instance how quickly the competitors seized on it. It was amazing. It was amazing that if you think about when you’re doing an acquisition, you’re really buying a client roster and it’s alarming to me that you would find yourself in a situation that you’re fully aware that the acquisition is going to happen well longer than anybody else, so how on God’s green Earth are you not poised to make those contacts and touchpoints faster than anybody else?
Now, again, maybe they had a prioritized list and we were just low on the list because we weren’t seen as a strategic account in the acquisition, and that’s understandable, but you need to know that’s what’s going to happen.
Jeff McKay: There’s no excuse for that, particularly given an understanding of how fast communication flows and the power of marketing automation and CRM and the ability to hone in at scale and get those messages out. There’s no reason that a delay should exist like that. All of that stuff should be pre-loaded before the trigger is even pulled.
Jason Mlicki: I should clarify. We did get that email. We got the email, “Hey, this acquisition has happened, here is what it means, blah-blah-blah-blah”, but we didn’t get a phone call from anybody. To me, in a business-to-business service like that and we have all these professional service firms that presumably listen to our podcast are, you need to be on the phone or in the office, especially for a strategic account.
Jeff McKay: You know, and this may be on your list as well, but the flip side of that same coin is you need to be reaching out to your employees-
Jason Mlicki: Correct.
Jeff McKay: Because there’s going to be a lot of uncertainty and doubt among your employees and they’re going to be asking, “Well, what does this mean to my role?” On both sides of that equation, “Who am I going to report to? Am I still going to have a job?” Those are important questions because we’re in the knowledge business and we don’t want to lose people. Recruiters will be attacking the firm looking for people that want to jump because they don’t want to play in this chaos, either.
Jason Mlicki: Well, it’s interesting and that’s on my list, and I agree. Simultaneous to that story, we had been working with a community bank commercially for years and they went through an acquisition in the exact same month. That’s essentially what played out there was that the people that we were servicing the accounts at the front really didn’t know what was going. There was just not good communications, to your point, not necessarily about their roles, but how things were changing in terms of how they service their customers.
We were trying to get things done and they didn’t have any answers and they were getting frustrated and they couldn’t articulate those things. That’s a huge problem because in that window, all of the trust that had been built up over decades of working together was eroding quickly. What you just bought, all that goodwill you bought is eroding because you’re not communicating to your people how things are going to change and what they need to do to navigate through that. That was pretty funny to watch, actually, in hindsight.
The other things I had on the list was just I guess… I said, “Do your research from a brand perspective”, which was just… I know the lens for this a little bit was how to integrate an acquisition’s brand, and to me, I think the first thing you need to do is be clear on, how visible is this brand that we just acquired? What does it relevant for? A lot of times we find ourselves as an agency in conversations between acquired and acquirer around the strength or relevance of a brand, and I’m sitting there saying, “I don’t think your brand is nearly as valuable as you perceive it to be.” I think the marketer on the acquirer side needs to have good data to back that up to say, “Well, this brand is really strong here or here”, so that they can make good decisions about the plan for that brand, how long it’s going to live on, when it’s going to sunset, and what that looks like. That’s my point number three I guess of some of the things we talked about.
Jeff McKay: That’s a great point. I like what you said about what the marketer needs to bring to the table, and it’s about objectivity. You need a third party to assess that strength because when these acquisitions happen, you’re probably going to have some clause in the agreement that the former owners have negotiated about the brand or the name of the firm. Is the name going to stick around or go? Oftentimes, the acquirer will say, “Okay, well, we’ll keep that in order to feed the ego of the people that are being acquired or appease the ego.” It’s important to understand the agreement, so as a marketer, get your hands on the agreement so you know what you can or cannot do from a legal standpoint.
If you bring the objective data, then you can negotiate around timeframes. “Yeah, we’re going to keep the name, but we’re only keeping it for three months or six months or 12 months”, based on objective brand strength and you have to have data or it’s just going to be sheer emotion and you’re going to get bogged down.
Jason Mlicki: What I like so much about what you said is the notion of just having a documented shared plan that says, “This is when this is going to happen and what it’s going to look like.” We got hired by a client years ago that did an acquisition up in Wisconsin and they asked me to come up there with them to really spend some time with the acquired company and talk a little bit about what the plan was going to look like to go forward. By the time we got there, it’s like the ball had been dropped so long there was no plan. When we got there, the people that were the marketers inside the acquired entity were beyond frustrated. They were angry and angry at us because there was no plan, and so the need to have that very clear plan.
I would also lump in there… I always say avoid awkward co-brands if at all possible, meaning try to avoid that period where you’re kind of using two names together. If you’re going to pull the rug on this thing, just pull the rug on it as soon as you can. That’s my two bits.
Jeff McKay: That’s a great point. I’d agree with you. Faster is better, unless that brand has incredible strength that you need to milk out of it. Whether that’s combining two logos together, which would not be the way to do it, or if there’s a subtitle to the acquired brand or that brand’s name exist but now it falls into your logo identity or some other treatment in that regard, I think it’s important for everybody to be on the same page. You want those steps to be as few as possible because you’re going to have people saying, “Well, where’s my cards? Where’s my office signage? Where’s my letterhead that reflects that?” Each little logo tweak, somebody’s going to want something. I think it’s better to have fewer of those and move as quickly as you can because it’s going to be more cost effective and timely.
I think also related to that, Jason, and again, this one may be on your list, one of the things that I’ve seen often missed is, where’s the ultimate endpoint for that company? Does it become part of an existing practice and name and everything goes away? Or, does it become a new practice because it represents a new competence within your firm? Or, does it become a sub-capability or solution within your brand framework?
I don’t think most people think in those terms of, where’s the final resting place in the brand architecture for this acquisition, service, or capability that we acquired? You have to think through that because it’s going to be a negotiation because there’s going to be an earn-out for the seller of the company, so there’s going to be a P&L associated with it and some key performance indicators. You’ll have to keep those in mind, too, as you migrate that brand entity into your own.
Jason Mlicki: I agree. The one thing I wanted to jump on that you said that I thought was really important was that, to me, you need to be patient but firm, meaning that you’ve got this plan for when you’re going to make these changes and when you’re going to sunset brands or make changes and how it’s organized or roll it into certain practices. The leaders of the firm that has been acquired are going to be resistant to that and they’re going to push back and they’re going to come up with a million reasons why you shouldn’t do those things, even though you know that they’re in the best interest of the new, greater entity that is this combined firm.
You need to be patient in listening to what they’re saying, but you have to be firm in your conviction of what needs to happen because I’ve seen too many marketing leaders sort of get walked on in that regard and they make too many exceptions for things that really aren’t that important that the leaders of the acquired firms, like you said, are really important to them but they’re not important to the marketer or the clients. You want to avoid that as much as you can.
Jeff McKay: That’s good feedback.
Jason Mlicki: I’m down to one. I got one more on the acquirer’s side and it’s really simple. It’s just listen. The thing I’ve noticed a lot of times is that when a larger firm acquires a smaller firm, there is this belief that we kind of have it all figured out. We know everything and this is a smaller entity and they’re not as sophisticated and they don’t know that much. There may be some truth to that, but a lot of times the smaller organization is more nimble.
Sometimes it’s maybe even got stronger capabilities in certain areas, maybe inside marketing teams. Or maybe they operate in geographies where things behave differently or practices that behave differently, so listen because you don’t want to dismiss really good insight that you’re getting back from this team or these people you acquired just because it doesn’t fit with your worldview. We’ve seen that happen a lot of times.
There’s a delicate line between some of the things we talked about, the acquired firm pushing back on things where they’re probably wrong and yet the acquired firm bringing new ideas to the table that are actually better and you have to be receptive and try to pull those in when you see them.
Jeff McKay: That’s a great point. You know what? That point really surprised me coming from you because it really speaks about humility.
Jason Mlicki: What was that? I don’t know what that word means. It’s interesting as I’ve watched that play out a lot of times where often smaller organizations, that old notion of sales hacking and marketing hacking, they found workarounds for things and better ways to do things that larger organizations quite frankly usually don’t. You want to absorb those if you can.
Jeff McKay: That’s a great point.
Jason Mlicki: Now, I’ve got a list for the acquired. You want to go for the list for the acquired?
Jeff McKay: Sure.
Jason Mlicki: One you brought up before, and I held off on it because I thought we would just sort of keep it structured, but the first one is I think you need to check your ego at the door. I don’t care what the transaction looked like and how much goodwill was bundled into that deal, I can pretty much promise that if you just acquired, your brand is not nearly as strong and as great as you think it is. You need to be humble quick and recognize that it’s likely that your brand is not more valuable than the firm that just acquired you. For you to get rolled in under as you described earlier a practice or whatever is in the best interest of the long-term entity and you just need to sort of flow with that.
We’ve just seen so many instances where the acquired firm is essentially fighting that. They’re fighting to keep their name on the door. They’re fighting to keep something that really just doesn’t have as much value as they perceive it to have. It would be better for everyone involved if they just said, “Yeah, you’re right. We sold to you for a reason and we want this new entity to be as successful as possible.”
Jeff McKay: I talk about what you just described in a piece called When It’s Time to Reinvent the Firm, and what happens when firms take on a new strategic direction or reposition or get acquired like this, it’s really hard emotionally for partners because it marks the end of an era, and it starts a transition. Any transition is coupled with grief, and that may seem weird when we talk about an acquisition, but the fact of the matter is the people that will be coming in need to go through a grieving transition in dealing with this because it’s going to be hard emotionally from them.
As an acquirer, if you can just keep that in mind and give particularly the older partners time to transition and grieve through those steps, it’s not like losing a parent or a spouse or something, but it really is important to do what you just said. Give them time to come through and adjust.
Jason Mlicki: That’s interesting. I haven’t thought about the emotional turmoil of that, and my sense is it’s important to celebrate as well in that window because, like you said, if there’s all this emotional turmoil around the transition, then celebrate the successes of what transpired. You’ve done something amazing to get to this point, and now you’ve made the decision to exit, so now celebrate that. Or, maybe not exit, to fold into something greater and bigger, whatever. That always helps to move through those transitions I think. I’ve never sold out, so I don’t know. Then, there’s we use the phrase “sold out”. It sounds like such a negative thing when it’s not. It’s your exit, you’re changing course, whatever. It’s another great phase of a firm’s life.
The second thought I had was just to be open and flexible. It’s a two-way street. I mentioned this earlier that the acquirer needs to be open to listening to new ways of operating that the marketing team, or really any team in the acquired firm, has brought. The acquired firm needs to do the same. The acquired firm can’t be stuck in its old routines and saying, “This is the way we market here. This is the way we do this and I reject your new ideas because it just doesn’t work for our market. It doesn’t work that way here.” Chances are good there’s a ton of learning to be had that the acquired firm has or the acquirer has, and if you don’t listen to it you’re probably going to find yourself out of a job.
Or, quite frankly, maybe the real issue is you’re not going to progress and you’re not going to perform as well as you could be. You could be doing way better than you are, so maybe that’s the better way of looking at it.
Jeff McKay: That’s another good one.
Jason Mlicki: My last thought was just be a resource. You’re one firm now, so you want to look for ways to create the synergies that the acquisition was supposed to create. Try to identify ways to leverage the resources of the greater whole to your existing client base. Be that resource that’s proactively trying to make those things happen as the marketing folks or the leaders in that acquired firm try to make those things that everybody wanted from the acquisition reality.
Force the case a little if you have to, but too often, I just… we’ve been through this. We’ve watched firms get acquired and it’s like their resistant to introducing the new offerings that they now have to their client base. I say, “Well, that’s the whole idea in the first place to get access to that client base, to bring them new sources of value.” Why resist that? Enable that to happen. Be proactive on it. Be a resource to make it happen rather than a resistant force to avoid it, which is what we see more often than not.
Jeff McKay: That’s the BS of PS at work right there because you had these two entities coming together, you’re going to be working with essentially strangers. In professional services firms, people don’t want to put their client relationships in jeopardy by introducing someone they don’t know that could spoil their client relationship. To the degree that as a marketer, as a practice leader, a managing partner, you can accelerate the development of trust. Trust doesn’t come with superlatives describing the strategic value of the acquisition, it comes from interaction and shared experience, so getting together and sharing those stories and collaborating on things that may not be specifically client-specific is going to accelerate that.
If you already don’t have a culture that trusts one another even before the acquisition gets there, you’re going to have even more trouble. Give, again, people time to develop trust. Don’t just send them out immediately to clients. It just doesn’t work. That’s what they’re going to tasked with is get out and start selling this immediately and you have to do that in a smart way.
Jason Mlicki: It’s funny. As you were talking, this image of the St. Louis Arch appeared in my mind and it’s sort of how I perceive that when acquisitions happen, relationships are made, meaning that these two entities have been brought together. The leaders at the top have made connections and they’re aligned and they have a lot of mutual trust. Everybody else has just been tossed into this thing really with limited knowledge and maybe even against their will. They’re like the basis of the arch, right?
Jeff McKay: Mm-hmm (affirmative).
Jason Mlicki: Now, you have to find a way to bring them together, to your point, because they’re the ones that are going to make this thing or break it. When the acquisition is happening, they have no relationship whatsoever. No matter how much time the leaders spent together, there’s no relationship inside these organizations. There’s going to be a lot of trust building that has to happen at lower levels inside the organizations. I think through all the acquisitions I’ve ever seen or been a part of, either as an agency or through whatever, just that really happens and that seems to be the biggest missed opportunity is forcing ways for that trust and those connections to be made.
Jeff McKay: Absolutely. Again, and this is true of most acquisitions, at least in my experience over the years. Firms focus on the financial dimensions of it. They don’t focus on the people dimensions. They say, “Oh yeah, our cultures are so similar and we’re complementary in our services, blah-blah-blah-blah-blah.” It always comes down to the money, and like you said, you’re buying a client list or some kind of brand equity or something and the people are always an afterthought. As a leader, you have to make sure that that doesn’t happen. You just can’t because you’re going to lose lots of good people and that’s really what you’re buying are the people.
Jason Mlicki: You’re buying the people and the relationships they have, and so your job really is to invigorate them to be a part of this new entity and help take it to new levels.
Jeff McKay: Related to that, I want to throw out a couple of others that I think are relevant, and they’re kind of interrelated. To the marketing people, you’re going to be tasked with brand identity and brand name types of stuff. You have to get through that stuff very quickly, very quickly, and get off your plate. People are going to want their cards, the website needs to be updated, all that stuff. I get it. Get it done as quickly as you can.
You as a strategic marketer need to shift your focus to a couple of other key areas. The first one is the intellectual capital of the acquired firm, white papers, case studies, products, solutions, and going deep and understanding what’s available in that arsenal and, how can you leverage that in building brand relevance for whatever the final brand is? It’s going to come out of that store, if you will, and you need to reconcile that against your own and come up with a plan for how you’re going to integrate it and exploit it quickly.
The second is CRM. If you’re buying client lists, you need to get those datas combined in those CRMs and reconciled and assign to owners. This is going to be another one of those political issues. Who’s managing the biggest accounts? How are we going to transition? That’s going to be a lot easier if you have one reconciled data set. I can assure you that either both CRMs are going to be a mess, or one is going to be impeccable and the other is going to be a mess, and you got to have somebody assigned to manage that project so that you can leverage the knowledge that exists in those CRMs. Or, maybe all that you use is Outlook, and if that’s the case, you got to develop a strategy to start sharing those relationships along with the building of trust.
The third thing that I’ll say, and Jason, you alluded to this about getting out and selling, you really should have a sales tool kit related to the acquisition and the service offerings that really is a smorgasbord for how people sell. You need to make sure that there’s key messages that everybody understands so they’re singing out of the same hymnal, so to speak. All of the presentations or collateral that you’re using is flexible so that you can change it as you’re moving along. Because people are learning here, the acquirer and the acquiree need to know what’s available from each other. What sales sheets do you have? What white papers do you have? Reconcile those in some form or fashion. Some will go away, some will be kind of co-branded, some will be some other combination of that, but you got to be on top of that as well.
None of this is going to happen unless you’re leading the charge on it because nobody is going to be thinking about it. They’re going to be thinking about the financial, they’re going to be jockeying for title and position and power, and all the rest of this stuff that’s client-centric is going to go away. You have to take the lead on it.
Jason Mlicki: Those are really great words of advice, and they are going to be the words we close on. Thanks for giving some very practical, actionable things that the marketing function needs to take ownership of to close us out, and I look forward to talking to you next week, too, Jeff.
Jeff McKay: All right. See you, buddy.