A while ago, I got the opportunity to talk to someone who has built his own company from a rather small, local enterprise, to an international group. Let’s call him A. I also talked to a person who built up her own company, entered the international market, and decided to sell off part of her life’s work to a bigger firm. Let’s call her B.
Both are passionate about their businesses and want them to succeed, develop, and prosper. One sees this from an acquisition perspective, the other from the perspective of selling off the company to a bigger one.
When I asked about tips, tricks, and difficulties in mergers, they mentioned partly similar points, especially in relation to the cultural merger that is inevitable when two companies join together.
“A” underlined the importance of maintaining a continuity in the management of the company you buy. If A buys a company, it is because it already works well, and will continue to generate profit, while enlarging the reach of A’s business as well. There is no reason to throw out the old management and risk losing the confidence and motivation of the entire remaining staff.
A also believes that delegating and allowing errors is vital. If you manage everything top down, with no room for errors, the teams of the newly acquired company will inevitably lose some (or much) of the dynamic which made it successful in the first place. This, A believes, is especially important if you work across cultural borders. You can’t impose your own culture on a company in another country, at least not fully, if you want that new part of your company to remain successful.
B’s story somewhat confirms this, but from the perspective of the acquired company. B’s experience of previously highly demanding corporate positions, combined with entrepreneurial enthusiasm, made B’s company very much of an “international, agile, and innovative startup”. Decisions were made quickly, and research and project planning had to follow the same pace. This was part of why the company was acquired after a few years of successful business. B was of course wary of selling off this “life’s work”, and have it absorbed into a bigger organisation. B also knew that the acquiring company was a bit on the “conservative” side.
Once the acquisition had gone through, B remained in charge of the acquired business segment. Certain aspects, such as strategy, finance, and overall management, were merged between the two companies. The mother company however had a completely different way of working, and the “agile” part of B’s company was being lost in the new company operations.
B tried to maintain the reactivity for the acquired business segment, but got bashings from the new owner when trying to support the staff of the mother company to follow a quicker pace. The reprimands were not a result of wanting to maintain the pace, but because the new boss perceived his “position” to be threatened by B’s initiative. All that B wanted to do was to pursue the business, and its development, as before. Since then, B has decided to take a step back and not do anything which might be perceived as being outside of the agreed perimeter of work (i.e. managing the acquired segment). As a result, the acquired business has lost in reactivity, and sees its potential market share, part of its attractiveness in the acquisition, under threat.
These two experiences can be put together. If B’s new boss had had more of A’s approach, things might have been different, and B’s enthusiasm encouraged and followed. After all, great managers are often said to bring out the best in their teams. Allowing the teams to shine contributes to their own success. On the other hand, B could also have considered ways of approaching the new boss to offer help, rather than doing so without “warning”, knowing full well that the acquiring company had a different culture from the outset. “Managing up” is a skill which is just as difficult to master as traditional “top down” management.
Finally, it all boils down to how different corporate cultures, even on a small scale, can be and how to deal with that if you want to put them together. If you merge companies, you not only merge business activities, you also merge people, and you have to make sure that both the mergers work out.
(For the record, A and B are not acquainted, and their companies do not do business together.)