28 Jun Culture & Communications: Two X Factors in M&A Success
A Conversation with Ryan Vestby, CompuVision
Strategic communications and corporate culture are often overlooked during mergers and acquisitions despite the important role they play in maximizing the long-term success of any business transaction. With up to 80% of deals failing to fully deliver on their strategic objectives, effective post merger integration remains a challenge. Financial and legal considerations typically occupy the attention of senior leadership during due diligence and closing, and most companies fail to align cultures and effectively communicate to both internal and external stakeholders pre, during, and post deal.
In this blog series, Incite’s Ted Kouri sat down with industry leaders to discuss their post-merger integration successes and battle scars, including candid insight, perspectives, and advice leading teams firsthand through the post-merger integration process. Each conversation will explore why a structured, proactive approach to communication and culture is critical to alignment and engagement, and key takeaways to maximize the value of your next deal.
Why is cultural integration post deal such a challenge?
Integration is important, but sometimes you can cater/pander too much to the company you are acquiring in a misguided effort to keep their people/culture intact. You do need to align them to your culture. Sometimes you just need to tell them how you do things and how your culture works – make them come on board with that or ask them to move on.
One of the bigger challenges is bringing over key people. These individuals are tired as getting to the deal is almost a finish line for them and unfortunately, they often just want out. In some cases, previous ownership/leadership may want out and are not keen to recommit and really put their heads down and get to work. Don’t make the error in assuming key people will want to come over, or if they do, that they will be able to perform at the level you want or expect.
What are some key lessons related to cultural integration and alignment? How hard is it and how long does it take?
CompuVision uses an integration dinner/weekend. To ensure it happens, we ask the management team of the company we were acquiring to schedule an offsite – that way it is in everyone’s calendars without them having to know why before the deal is totally done. We also make sure to bring a 2:1 ratio (CompuVision to acquired company). The integration event is very powerful. We use a facilitator and invest significant budget for it to happen. This is part of our plan at the onset and invest heavily into ensuring it is accomplished. We make sure to include the event as part of the deal costs.
What’s a cultural deal breaker for you when considering a potential acquisition? What would make you walk away?
We looked at 18 deals (signed NDAs) before finding the right one – how many of these 18 didn’t make the cut because of culture? Most of them. We have to use a critical eye and even then, make sure we go through the appropriate steps to ensure we can integrate the two cultures successfully. If not. What’s the point?
Shifting gears to communications, let’s talk external stakeholder communication. What lessons can you share from announcing an acquisition to customers and external partners?
You can’t fix a bad price. If the customers you are acquiring doesn’t value a higher end service or value proposition, they will be hard to integrate and re-educate to your higher priced model. With that being said, we meet with every single customer of the acquired company in person within two weeks of the deal being announced internally.
In Incite’s experience working with clients through the due diligence, closing, and post integration phases, who, what, when, and how much to communicate is a tricky subject. What are your thoughts on communication to key stakeholders during the deal process?
Most communication needs to happen pre-press release. We didn’t do this for our first acquisition and that was a mistake. Our staff and customers are typically supportive when they hear this news proactively. People hate to be blindsided and they hate surprises.
Another interesting aspect is the challenge of a transaction involving a company with a remote workforce spread across multiple locations. This is where the importance of face to face communication comes into play in a major way. Yes, this is one of the more time consuming methods, but critical for a CEO to get out in the field and talk about the acquisition (with both current employees on your team and those with the company you are acquiring).
Takeaways – What has been your biggest mistake or regret from a past deal? If you could go back, what would you have done differently?
Don’t assume other businesses will automatically operate at your pace. Their accountability, expectations, etc. may not be the same as yours.
What advice would you give the individual managing your next acquisition?
In your first deal, you need to ask lots of questions, and you need to get help. Are you acquiring a platform/equipment, or are you integrating them into your company? The second requires a lot more effort to do well. Also, you need to be patient. You can’t necessarily rush everything to make the dollars work as you will lose the people and the customers if they aren’t brought along and trust isn’t built.
Ryan Vestby is the CEO of CompuVision, one of Canada’s largest IT managed service providers, leveraging technological innovations for businesses today and tomorrow. Ryan started with CompuVision as the company’s third employee at the age of twenty-one and has played an integral part in the company’s growth and evolution. Ryan has taken a special interest in innovation and disruptive technologies, which fundamentally alter the way businesses operate, and is the force behind CompuVision’s approach of Manage, Protect, and Accelerate.
Over the past few years he has taken CompuVision from an idea of what was possible, to a sector leader in managing IT, protecting clients from cyber criminals, and accelerating businesses using innovative, disruptive technology. He sits on the Business Council of Alberta and won the Business in Edmonton 2017 Leader’s Award. Ryan is an active member and sits on the Board of the Young Presidents’ Organization (YPO) and is one of only two Canadian leaders to be part of the American based TRUE Profits Group (TPG). Ryan has led the company’s expansion across Canada and into the US, tripling the business in the last 7 years, including the successful integration of two recent acquisitions.