Contemplating An Acquisition? 10 Common Mistakes to Avoid

Jan.30.2017 Counsel

Frustrated office manager overloaded with work.

Acquisition is a growth strategy as old as commerce itself. It allows companies with opportunistic leadership to expand their services and achieve broader goals. However, while business acquisition can bring incredible opportunities, it presents great challenges and requires a unique set of skills. Prayerfully considering the deal is important, as many companies have encountered both operational and organizational crises while executing an acquisition. These crises can have longstanding impacts on your customers, employees, and finances. If you are contemplating whether an acquisition is the right strategic move for your business, consider these common mistakes:

1. Saddling your company with a dangerous level of debt. Going into debt for the sake of an acquisition is a lot like starting with one hand tied behind your back. Consider alternatives in this time of change to avoid added interest and a creditor who can hamstring your company.

2. Acting with blind optimism. Senior executives often fall victim to an overly optimistic attitude, especially when excited about growth opportunity. Ask a neutral party or even a skeptic to list the foreseen risks of the acquisition and make recommendations to key staff.

3. Lacking unity, alignment, and commitment. Unified team effort and heightened communication are vital for a slam-dunk acquisition. Consider using a weekly war room and directly link compensation to acquisition plan goals to gain buy-in and accountability during acquisition planning and execution. Include key managers in the acquired company.

4. Underestimating the cultural differences. Just as Rome wasn’t built in a day, forging a common culture after an acquisition requires long-term effort. This is even more of a critical issue when your culture is decidedly Christian and the acquired company’s isn’t. Take time to communicate, demonstrate integrity, and build trust.

5. Poorly executing your employee retention strategy. Both the acquirer and acquiree are impacted by integration. You can’t afford to lose talent from either side, so communication is critical during this period. Recognize the key strengths and personalities that will build the desired post-deal organization, and put strategies into place for retaining them.

6. Allowing politics or private agendas to affect HR matters. Acquisitions often involve some personnel reassigning. Approach this matter with enormous fragility and avoid favoritism at all costs. A lack of clarity or perceived unfairness will drive key people to leave.

7. Planning without intention. A lack of planning on leadership’s part can cause the team to lose confidence, enthusiasm, and focus. Plan strategically and with intention to avoid unclear designation, slow decision-making, and other pitfalls.

8. Having unrealistic expectations. Remember that every acquisition requires transition time and cost. You can expect short-term impacts on productivity and performance as people learn their new roles and navigate new team relationships. Budget for this transition and provide extra support where needed.

9. Losing touch with your customers. When navigating an acquisition, leaders tend to focus on the inside. However, it is important to remember that your customer is the driving force behind growth. Communicate with them about the transition and keep them excited about benefits to come.

10. Neglecting your culture. How long did it take to establish your company’s current culture? Remember that cultural assimilation after an acquisition may take just as much (if not more) time. Keep working to establish a common focus and unity will be within reach.

Support for your Growing Pains

An acquisition will undoubtedly change your company’s culture, but forging a new path can bring incredible rewards. By avoiding these common blunders and focusing on strong communication, your employees and customers will be more apt to stick with you throughout the process. Participation in a C12 Group has linked many business owners to others who have successfully navigated their own acquisition growing pains.