Global mergers and acquisitions (M&A) reached all-time highs in 2021, and continued throughout 2022. There are many reasons that companies acquire and merge with other businesses: to boost growth, acquire technology, expand talent, and fend off competitors.
Despite all the upside potential of a good deal, there are also real challenges that come with integrating teams, cultures, offerings, and brands. As dealmakers calculate the top and bottom line impacts for growth, they must also anticipate the critical role of communications leadership to guide people (internal and external) through change.
This recorded webinar conversation features a panel of marketing and M&A leaders as we discuss the role of communications to guide teams and stakeholders through deal cycles and integration.
Key Takeaways
- Marketing plays an important role in demonstrating brand value and maximizing deal value.
- Clearly communicate integration plans with employees through M&A so they feel connected and their concerns and fears are addressed.
- Consider all stakeholders in exit decisions.
- All founders will eventually exit their business, so it is important to get clear on personal goals.
- It can be challenging to navigate large company structures post-acquisition, so show up authentically and with a willingness to learn.
Links & Resources Mentioned
- Marketing + Finance: An unlikely match, or a love story written in the stars?
- Message: From the founder’s story to an unbeatable story in your market
- How Authentic Fractional CMOs™ build maturity in growing organizations
- The Future of Private Equity podcast featuring Jennifer Zick
Full Webinar Transcription
Introduction
Jennifer Zick: All right, welcome everyone. Rolling in. We’re just going to wait. It takes a couple minutes for the doors. The virtual doors are opening today’s webinar. So welcome. If you’re rolling in, I’m watching the counter slowly tick up as connections are happening here. All right, we’re going to go ahead and get started because we’ve got a lot to pack into this hour today. So welcome to those of you just joining and jumping right at the top of the hour.
I’m your host, Jennifer Zick, and I’m delighted to be here with three of my friends for what will certainly be a high energy, high learning conversation. Before we start, I just want to share with you a couple of the formats for today’s event, what you can expect and who we are.
If you have not yet met Authentic®, I’d like to introduce you to who we are and what this webinar series is all about. So, Authentic is a community of fractional chief marketing officers that works with growing businesses to help them Overcome Random Acts of Marketing® and confidently take the next right step toward healthy growth.
So we primarily work with businesses across the United States who are entrepreneurial, privately held and growing. They’re usually somewhere between five and 100 million in annual revenue. And the stakeholders we work closely with on a day to day basis are the founders, owners, CEOs and their revenue leaders, and then of course the departmental leaders on the, in the C-Suite.
So I know that in the audience today, we have a really wide variety of attendees between owners and investors, marketing leaders, sales leaders and deal makers. And I want to acknowledge that each of you might be taking different bits and pieces from today’s conversation. We’re really going to kind of focus mostly on the lens of the entrepreneur and the founder and the leadership of the team through mergers and acquisitions and the role of communication. But I hope that everybody walks out of here today with something actionable and applicable to their role and how they’re going to apply the content in their organization or those that they serve.
So as we roll through today’s webinar, it’s going to be a panel conversation. This is not a slide presentation. We hope to keep it really fun and conversational, and we invite you to be engaged in the conversation through our Q+A.
If you’re visiting and attending the webinar today, you should see a Q+A icon at the bottom of your screen or in your controls screen. There’s also a chat icon. I really invite you to if you have any questions or comments, use the Q+A, because I’m going to be paying attention to that window through today’s conversation. And I hope that by the end of the meeting and conversation, we’ll have time to respond to a couple questions from the audience. So I invite you to use that tool and join us there. But we’ll go ahead and get started.
And I’m just delighted to introduce our three panelists today. And I’m going to just tell you who they are by name.
And then I’m going to roll around this virtual room and call on each of you and let you share a little bit more about who you are, the work you do, and your context within this conversation about mergers and acquisitions and communication. So with me today is John Ryan, who is a fractional chief marketing officer here at Authentic. I have my friend Dan Cremons, who is a recent number one best selling author previously in private equity directly and now consulting with private equity firms, and Joe Keeley, CEO and co-founder of Justify, a lifelong entrepreneur who has seen the real life story of what it means to move businesses through mergers and acquisitions and integration. So thank you, gentlemen, for being here with me today.
I’ll just go back around in that same order and let you each say hello and tell us a little bit more about yourself. So, John, I’ll start with you.
John Ryan: Okay. Well, hello everyone. As Jennifer said, I’m a fractional CMO here at Authentic. I help companies with their strategy and their planning and their overall integration of marketing into their business outcomes that they’re looking to address. And my background, mergers and acquisitions, is I’ve been through a bunch of them on both sides of the table and different levels. So hopefully I can tell you something today that will help you if you’re looking at one or you’re in the middle of one.
Jennifer Zick: Awesome. Thank you, John. Dan, everybody.
Dan Cremons: Dan Cremons here. I’ve spent the last 15 or so years in the M&A world in one way, shape or form. I’ve been on the buy side and buying companies and leading investments. I’ve sat on the board of acquired companies. I’ve been CEO and played different CXO roles in acquired companies and acquiring companies who have bought other businesses along the way. And so I’ve seen the M&A game from a bunch of different vantage points, and I’ve made many of the mistakes in the M&A communication book. So I look forward to bringing those to you today and helping you to learn from my experience.
Jennifer Zick: Thanks so much, Dan. Hey, Joe.
Joe Keeley: Hi. Great to be here. Thanks for having us. Joe Keeley. As Jennifer mentioned, I’m currently the CEO and co-founder of Justify Technologies, which is a payments and embedded finance fintech company for platforms. Prior to that, which made me remarkably unqualified to run a fintech company. I ran one of the nation’s largest childcare companies, College Nannies, Sitters and Tutors. I founded it while in college and went on a 15 year overnight success journey where we sold franchises, bought and sold. That was part of our business, and then ultimately I sold the parent company to a public company, Bright Horizons, and stayed on for three and a half years. As you know, integrating so can hopefully bring a little bit of that experience to the conversation today.
Demonstrating the Value of a Brand
Jennifer Zick: Awesome. I’m so grateful to all three of you for sharing your time, your wisdom with us today. Let’s get started. Joe, I’m going to start with you. I love what you just said overnight 15 year success story because I’ve known you through that pretty much the whole 15 years from the time you were just graduating college and getting started. So congratulations on that overnight success that you made look so easy for those of us cheering you on along the way. All right, so we’re here today focused on M&A, but because Authentic is who we are as a team of CMOs, we’re going to talk about it through the angle of communication. Communication as the vehicle and thread that knits every component of it together from start to finish.
And an M&A can include a lot of different shapes and forms, and there’s a lot of heavy lifting that’s involved before a deal ever happens. Right? So most of us in the entrepreneurial community are familiar with this idea of a pitch deck. Oh, we got to get our pitch deck ready to go raise or bring in a strategic investor and acquirer. But in general, and that’s often a place where marketing is leveraged, help us put together a pitch deck. But that’s not the only role for marketing and communications in a deal. So talk to me about how important it is for marketing to demonstrate, even before a deal’s on the table, the value of a brand, the ability to communicate that to stakeholders, and to help maximize the value of a deal.
Joe Keeley: Well, whether it’s raising money, which I recently just, you know, within the last year closed $13 million seed round for our new company, or an acquisition, either, everyone is always selling something. And it’s not just a snake oil sort of sales pitch. It is communicating, it’s understanding and articulating why this makes sense for the overall, but then why it makes sense for us in the technology department or operations or if you are bringing something in, because blockers come up well before a deal and they sort of manifest themselves in. Well, I’m just, you know, ultimately, what’s not being said is this feels like a lot of work to me. If someone’s acquiring something, and I’m not really understanding how this fits. Not always is it articulating the true emotions there, but I think really understanding stakeholders, and there are so many stakeholders.
I was part of an acquisition team once acquired, to go acquire more. I acquired a similar company to ours in the UK, and it came down to understanding who all the stakeholders are and what’s important to them, so it can be so multifaceted. And I think sometimes an important part of a communication plan is a listening plan.
Communicating with Stakeholders
Jennifer Zick: Ooh, that’s an excellent point, Dan. I’m going to pivot to the same question in your direction, and I’m going to do a totally unsolicited promotion of your new best selling book, Winning Moves, where you were so generous to include me in one of your winning moves aspects. But Joe just teed this up beautifully. Joe, you said that you’re always selling something to somebody, and usually more than one somebody’s right. And here’s my now famous quote in Dan’s book. Regardless of what you’re selling human to human, not business to business. And humans make buying decisions, or in this case, acquisition or investment decisions based on emotion, and back it up with logic. So, Dan, you’ve seen some deals done, too. How would you respond to this idea of listening to stakeholder communication in the deal world?
Dan Cremons: Well, I think the way you phrased it in that quote is applicable not only to the context in which were talking about it, which was, if you are a B2B sales leader, B2B CEO, and you’re selling a product or a widget or a service, selling on emotion or selling the story and playing to human emotion is an effective way to sell. Also, this wisdom also applies to selling a business, too. And we have to remember that if I just take kind of your quote and apply it to that context, we have to remember that the people sitting across the table from us, the prospective buyers of a business, are humans as well, even though some of the finance people that sit across the table from us, feel a little bit more like machine than, you know, humans sometimes.
As a recovering finance guy myself, these are people, and they want to understand a story, and they want to be convinced that this story is going to make their lives better with you than it is without you. And they, you know, they have the same longings that we all have as humans, which is to be successful and for safety and recognition and affirmation. And so just, you know, weaving emotion into how you are positioning your business, using the vehicle of story to help sell your business. And they’re just really powerful tenants of an effective sales process and marketing, of course. Back to your original question, Jen.
Marketing, of course, is the functional area in a business that is in most cases best equipped to actualize those things in a sale process, to use story and positioning and messaging and understand how to sell into human emotion. So having marketing at the table defines how we are marketing the business? What is the story we’re telling to buyers, et cetera. It can be really value generating.
Jennifer Zick: Right. Thanks, Dan. And John, you’ve often been the person at that table helping owners and founders and their teams articulate that value. So what are some of the comments you’d add to this line of questioning around the role of marketing and maximizing value in these moments?
John Ryan: Well, I really like what Joe said around listening. I think that’s super critical during this time because this is a change that’s been put on both organizations that’s usually been foisted on them from a practitioner standpoint or an employee standpoint. And when you’re going through this change, the employees, I think, probably feel the most vulnerable during this time. And we need to do everything we can to listen really well to make sure that we hold on to those best employees, the linchpins that make both businesses run. Because I’ve been involved in too many M&A deals where we didn’t probably listen all that well from the executive team. And what happened was within two years, the people that were making those businesses were gone.
Change Management
Jennifer Zick: And we’re going to talk more about that topic, about creating trust and security for employees through those major moments of change and how communication is a vehicle for that. But let me just take a moment to acknowledge that several people have joined the webinar since we first kicked off. So for those listening in, if you’ve got questions for our panelists as we roll through, please drop them into the Q+A. I’m going to keep a side eye on that sidebar for Q+A. And at the end of the meeting today, if we’ve got time, we’ll answer some of the questions or comments from the audience. John, I’m going to come right back to you full circle again on this next question.
Here at Authentic, our CMOs are often at the helm of a lot of these major moments of change and transition that come along with mergers and acquisition. We’ve seen, and even those on our team prior to joining Authentic. Altogether, we’ve seen a lot of deals. We’ve seen deals that were, that looked like a sure bet that fell apart right before the deal was inked. We’ve seen deals that have looked good until that integration starts and you realize communication could have been stronger. Right. So what are some of the greatest make or break moments that you’ve seen in deal cycles, and how can planful communication smooth that path then for success or greater likelihood?
John Ryan: Yeah. Okay. So I think there are two areas that I’d probably think about a great deal. One of them is what I would call the M&A through line. So from the very beginning of the story, that’s going to have to sustain you over three to five years. Why did you do this? And so what I’ve seen in many cases is they get six to twelve months into an M&A, and then they are not seeing a lot of traction between the two organizations. And then the question is answered, well, why do we do this? And everyone looks around and says, we’re not sure. So, you know, the through line, the m and a through line is very important. What was the theme of this whole thing?
Because when you look at the different groups of the stakeholders that you have to address, whether they’re customers, employees, partners, or the investors, they all are listening to, what’s in this for me? So what am I getting out of this? So you’ve got the high level through line story about why this makes sense to the marketplace, but then how is this going to make sense to me? And if you start with the customers, they’re looking for long term benefit from the merger. If you’re looking at the employees, and we’ll get to that later, they want job stability and they want a career. And then when you get, for instance, to the investors, it’s, how does this create additional value in the marketplace?
If you can’t answer those questions, you’re going to have a tough time in a year when you look back and say, why do we do this? So I think the M&A through line is extremely important. And what happens is you’re defining a new North Star for the organization. So you have to reframe and redefine what are the roles and responsibilities of the people in your organization? What will they be doing? So people and human beings need to make sense of things, and they do that with stories and they do that with a constant theme that you keep going back to. So I think that’s the first part. I think the second part is what I would call the timeline, which is, okay, you know, we’re going to get this done.
And because this is really organizational change management we’re looking at, and it’s been foisted on us, we’re going to have to do some OCM work, which means we probably need a steering committee, we need someone to oversee the integration and the timeline of what we’re trying to get done with the milestones. And then we probably need somebody to be in charge of integration. Just like a software platform, the platform of our organization gets stronger if we can integrate more value into it. So we have to look at it that way. And then I think the other thing is, in regard to the culture, I think we should encourage cross organization collaboration.
So it’s not just the executive saying, here’s what we’re going to go do, but it’s putting peer to peer communication out there and say this new person coming in from the new company or the company we’ve acquired a make sure you contact that person and get conversations going because that will create a new culture that will help your new company.
Jennifer Zick: Nice. Dan, you’ve seen a lot of deals, some that maybe fell apart right before the finish line and some that, you know, you can look back on three to five years later and say, wow, that was the ultimate success. What are the difference makers between those situations?
Dan Cremons: Lots of differences. I mean, lots of difference makers, lots of factors at play there. I mean, as I think about the defining moments in the arc of a deal cycle or an m and a, the one make or break moment, that really jumped to mind for me as I was listening to you talk, is day one. And day one, for those that don’t hail from the M&A world, is the first day when the deal closes and the wires clear. So the picture press release goes out at 09:00 on a Monday morning. The things that happen or don’t happen, as the case may be in the 8 hours thereafter, set incredible precedents for the weeks, months, years to come. And it’s almost the same way, in the same way as the first.
What do they say the first 15 seconds of a blind date is the period of time in which somebody determines if they want to be with you or not. And it’s the same kind of deal. First impressions matter in dating. First impressions matter a heck of a lot in m and a as well. And so it begs a question of, well, how do you nail the first day, and how do you give yourself the right to have a second day and get people leaning in and get, you know, there’s some things we can talk about there, but a lot of it comes back to the topic du jour here, which is how you communicate and how you show up in day one.
A mistake I have made in day one is not actually even showing up as the acquirer, you know, and leaving it to a press release to message to the employees and customers that there’s a deal that’s been done. So rule number one is to show up physically, day one. And rule number two is shown kind of in the metaphorical sense, authentically, empathetically, transparently, and with a lot of commitment to why we did the deal and why this can mean for a brighter future for both of us.
Jennifer Zick: That’s great, Dan. Joe, is there anything that you’d like to chime in on this particular topic?
Joe Keeley: Well, I think that there isn’t one size fits all. I mean, everyone has the intent of the future being a better state than the current state. So I think articulating those whys, I, it feels different if you are the acquirer or the acquired, if you’re the big company or the small company. So I think where marketing can come into play here is using some of the tools of the toolbox and that exist in other ways, like in customer acquisition and creating Personas and understanding. Okay. Like, who are the different groups that we want to talk to? Because it feels very different if you’re part of an entrepreneurial company, you’ve bought into that mission and vision and that founder led.
And then if you’ve done your job, a lot of times you’ve become successful and a big company wants to buy you in some instances. And that can feel very disruptive and almost, I’ve heard the word betrayal used in this. So really understanding the different Personas and recognizing there’s not one size fits all in the communication. And I would just, when I use communication to my listening point, let’s think about it in, yes, planned communication out, but it’s planned communication in.
Guiding Your Team Through M&A
Jennifer Zick: Right. Oh, so wise. And we’ve already danced around so many of the topics that surface in this next question I have for you. We’ve acknowledged that, you know, an important role that marketing can play is to help organize and orchestrate stakeholder communication and looking up the different Personas and groups and what are their feelings? How do you authentically connect with them and help arm in arm guide them through this process? Because change creates risk and can create fear. But the other reality is that in most situations that don’t involve m and a, let’s say it’s a new product launch. You can bring the whole organization right up to the launch day with a lot of clarity and pre communication. But with a deal, you have to maintain some level of, like, secrecy.
You know, it has to be very tightly held information to protect everybody’s interests, and yet you need to be able to bring the organization through. And so day one happens. What if you haven’t been able to have marketing at the table until the deal is inked? How then do leaders in those situations prepare their communications plans? What, what have you seen work to organize communications without the help of perhaps one or either internal marketing department?
Joe Keeley: Well, I would push on not doing it that way. And there can be work that’s done and prepped, even if it’s not pushed out. So day one shouldn’t be the conversation. Where is our playbook? Do we have a playbook? What should we do? What are the conversations to talk about? But I think that, you know, it’s about having a plan. And then I’ll use sort of the clearly quite intentional part of, you know, your team’s company in Authentic is it’s really about some of this. It’s about being authentic, and it’s about going back on, hopefully, the building blocks that have already been there.
If you have articulated values that you’re really living, if you have a purpose, if you have a vision, and then going back to those are the foundation in which all of this communication, and I think a mistake that’s sometimes made in this communication is saying, this is going to be amazing, and we have it all figured out and no one has anything to worry about, and we are going to be perfect, essentially, is the message. And I think humans recognize that’s not true. And the fact that you’re saying that, or even like giving the feeling that everything is okay over here is really actually making me more upset or more uneasy. So I think things that I’ve done in the past that maybe fall into the small category of that worked well would be saying, this is the intent.
To John’s point, this is what I believe. This is why I feel like this is going to work. This is why I feel like it’s aligned, and this is what I’m going to do as a leader to make sure I do my very best. And this is what I’m going to promise to you. And as long as I deliver on that and I don’t say I’m going, you know, I can predict the future and everything is going to be okay all the time. But what if you can feel comfortable in times of uncertainty and unknown, that you can lean on a team of people that are going to keep their promises, and those promises are ones they can keep. It can go a long way with those humans.
Jennifer Zick: That was so well said. Thank you, Joe. It sounds like you’ve done this before and maybe learned a couple of things along the way. Dan, over to you with this question. As you’ve worked with the people that are inside the deal, considering how to move up to that day one moment and beyond, what has been the role of communications in building those plans and who’s at the table helping lead that through?
Dan Cremons: Well, I think to hook into Joe’s first point, I would challenge the notion that marketing ought not have a role at that table. There’s this, I think you pointed to it earlier, Jen, but a key issue that I always encourage business owners who are selling to think differently about is this reluctance to tell their teams, or maybe only tell a few key people, the CFO and those that they need in due diligence. And oftentimes this is for fear that people are going to get scared and leave if they know there’s a deal that’s going to happen or people are going to ask for more money or there’s some other fear based reason that drives this secrecy. But my experience is a couple things.
Number one, this fear and the associated risks that come with that fear, or people are going to leave and what have you are often overblown, number one. Number two, there can be a real cost to secrecy, and it’s particularly applicable when we think about the cost of not including a marketing leader in this. If I’m talking to a business owner who’s going to market, going to sell their business and trying to convince them why marketing should be at the table, the logic path, the thought process is very simple for me. It’s something like, hey, mister or misses business owner.
I think you would agree that the way we message the business, the way we position the business, the story that we tell when we’re looking for potential buyers eyeball to eyeball, those are really important to maximizing the outcome, and they’re probably nodding in agreement. And I think you would also agree that of all the different people in the cast of characters in our business marketing is the group, or the person, as the case may be, who is best equipped to help us with that. Would you not agree? Get them nodding again. So why is that person not sitting over there right now? And so life’s about trade offs.
And if faced with a trade off from a selling business owner, if faced with a trade off of trying to preserve this secrecy for these fear based reasons and getting somebody at the table who can materially impact the success of the sale process, kind of a no brainer. And I recognize full well there are sometimes situations in which, for a variety of reasons, the secrecy that the fact that there’s a sale at play needs to be closely held. I faced those before, but by and large, I would push into, for selling business owners, I would push into this notion that you need to keep this closely guarded.
Jennifer Zick: Thank you, Dan. That’s a lot of wisdom. John, is there anything you want to weigh in on this before we bridge into the next related question?
John Ryan: No, I thought that was great.
Fostering a Positive Team Culture
Jennifer Zick: That was great. All right, then let’s keep rolling. And that keeps us right on time, which is perfect. So we’ve already acknowledged that this is really about change management and the role of communication. It’s about selling, it’s about stakeholder alignment, and then it’s about change management and integration. So change is hard. Change creates anxiety, even in the best intended ecosystem with the best communication. So especially for those employees that wonder about the future of their roles and their career. So what advice specifically would you offer to leadership teams to help reduce anxiety for their employees? And, John, you’ve already spoken about this. I think it was you talking about creating that cultural connection across teams. What are some of the, you know, winning moves, if you will, Dan, that help foster cultural connection and alleviate anxiety?
And, John, I’m actually just going to start with you on this. You started to answer it, and then we’ll toss it around.
John Ryan: So who do you want to answer? Me or Dan?
Jennifer Zick: Oh, I’m calling on you, John.
John Ryan: Okay, here we go. Here we go. Here we go. So. So what I would say is. What I would say is the employee usually has a couple of fears. One of them is, am I going to have a job? The other one is, will I fit into the new culture? And having been high tech for over 30 years, I think the second one is a big one, even if you’re a smaller company, but you have something that disrupted the marketplace and someone who has more mature distribution comes along and buys you, then what happens is the smaller company says, well, you bought us because were smarter. I don’t need to stay here. And that’s a real thing. I’ve seen it. But the employees are usually concerned about my career? My job here?
Am I going to fit into the culture? And so what you want to do is make sure that you over communicate and you don’t allow rumors and misinformation to get in the way of reality and the facts. And so you want to over communicate with the employees and you want to make sure that they understand that this is where we’re going. And here’s how you can contribute to that. A big part of this, I believe, is to go back to what Joe and Dan were talking about. And that is you’ve got a pre-closed plan that everyone’s involved in. You’ve got day one and you have a post close plan. So if you’re not doing all that work, what you’re doing is you’re opening the door for problems to occur.
My son was told by a movie director out here in LA that the universe will do everything it can to keep your movie from coming out. And so I think the same thing here, with a successful merger, the universe will do everything it can to keep it from being successful. So you’re going to have to do the work you need to do, which is the pre-work day one and the post work, and tie that together and start to alleviate these concerns. The other thing that I think is important is that you look at the data and the segmentation that’s coming from both groups. So you have facts that you can go back to and talk about, make the deal, make sense to both groups and not allow, again, for speculation or assumptions to seep in.
But to say, look, when I segment the data on both sides, here’s what we’re seeing, here’s what the data is telling us. And guess what? There are always areas we can improve and we’re going to go do that and we’re going to work on it together. And getting them to believe that their future just got better.
Jennifer Zick: That’s good. I love how. Oh, sorry.
John Ryan: Yeah, no, I think that’s what I’ll finish with. It’s getting them to believe that again, the through line, the North Star, where we’re going is far superior than where we’ve been. And this is exciting, and I need to find out where my voice can be heard here and what I will be known for going forward.
Jennifer Zick: Yeah, I appreciate how you started with addressing the feelings and emotional reality of the situation backed up by data that helps them logically land with that belief, tie their feelings to the information. And Jill, what would you say on this topic, having led a team through and then staying three years post acquisition, what did you learn through that experience and what worked or didn’t?
Joe Keeley: Well, I think that all the things that have said all agree with. I think a lot of things for me go back to also lessons that I have from parenting, which is three things here. Have a few simple rules or reasons, you know, reasons or, you know, this is why we’re doing this. And repeat them often and be consistent because there’s a lot of moving pieces. It feels like my world was picked up and spun around and throwback down and I, you know, and so you want to be, you want to have a few simple rules or messages around why you want to be, repeat them often and you want to be consistent, follow through on those promises and then also recognize that there may be some people who are, who choose to just be in a bad spot.
And that like anything else in business, whether it’s we’re gonna merge, there’s little mergers that happen all the time. We’re putting sales and marketing together now or now. We’re moving them apart. Like, things happen all the time. We’re making business decisions. And as long as I feel like they trust that you are looking to consider stakeholder value as well as shareholder value, I do believe that logical minds will prevail eventually, but maybe not this day. So I would caution being too hard on the sales. It’s going to be great because they have to choose and own 51% of it being great and it might not be great for them. And that is not your cross to carry. So I think it’s. Those are the things that I think if you do those, you’ll have greater outcomes than you won’t.
Integrating Team Cultures
Jennifer Zick: Yeah. I appreciate how you emphasize, like, keep your promises, be consistent, but you also offset that with, like, making realistic promises. Like, don’t promise something that you can’t control or deliver. Right. As you’re guiding teams through this. And we could go a lot deeper on that question. And some of these themes are going to trickle into the next, but I’m going to keep moving to make sure we cover everything we promised. And Dan, this one is going to come back to you first. Sometimes deals bring immediate change and places to begin integration right away. But other times the acquiring company may say we want the acquired company to continue to operate as is, quite independently. We’re not going to get up in your business and change anything yet. Let’s just keep moving forward. But eventually integration starts to happen. It’s pretty inevitable.
At some point, teams, brands, culture, solutions will start coming together one way or another. And I’m curious on two points with the deals you’ve observed. Where does integration usually start first, is it looking at people and redundant roles and team alignment, or is it looking at solutions and how we go to market? What happens first? And the second part of this, it’s really two questions, is how can leaders communicate to help their employees? And we’ve covered some of this. Embrace rather than resist the change when it comes, because it’s inevitably coming.
Dan Cremons: Yeah, yeah. At the risk of being unhelpful, when it comes to how integrations tend to play out in practice, the answer is it depends. And it depends on the acquisition thesis. I’ve done deals where we’ve done little to no integration. A couple of my old firms did a couple of very successful deals. A lot of acquisitions and little to no integration. I’ve done deals where the acquired company gets fully absorbed into the acquiring company. And in most of those cases, we actually retained a lot of the employees and just integrated them into the broader.org. But in terms of how integration happens, it depends. If you look at the average case, the low hanging fruit integration that happens in most cases is in what I’ll just kind of generically call the back office.
You know, if you bring two companies together, it’s unlikely you need two separate accounting teams. It’s unlikely you need two benefits administrators. It’s unlikely you need two IT teams. So this is often where integration happens first. Thereafter, you know, when it comes to the degree to which brands are integrated or go to market is integrated or product orgs are integrated, it just kind of depends on what the deal thesis is. So, you know, while this is probably an unhelpful non answer, maybe the lesson here is that there shouldn’t be a one size fits all, cookie cutter approach to integration. Be clear on what the deal thesis is, what, you know, where is value going to come from in this combination?
Get really clear on where specifically you focus on driving that value organizationally, and then allow that to lead you to the answer of how we think, you know, how should we think about where to integrate, how to integrate and at what pace to integrate?
Jennifer Zick: Yeah, I actually think your non answer is a really helpful answer because it uncovers the reality that deals are done for different reasons in different ways that compel what shape integration, if any, takes. Right, like an acquisition might simply be bringing investors. That changes the ownership balance, but doesn’t change the way the business runs essentially at all, or it might be a strategic acquisition. We recently had a client that we helped to lead through a strategic acquisition. They were a custom software development shop that served a specific industry, and the buyer for them bought their developers and didn’t want their clients. And so we had to transfer the client accounts and sell those to another business and create another transaction.
In that whole deal, it was a really complex deal with a lot of major stakeholder groups, and thankfully, things are landing in really peaceful pastures so far with everybody. But integrations look different depending on the purpose for the deal itself. Joe or John, anything you want to add on that note?
Joe Keeley: I think that one thing from a leadership standpoint is to, in all the things that have been said, but as it relates, specifically relates to integration. Here’s our plan. And people would, I think it’s really healthy for folks to have things to do. So this is what, after you say, here’s the reason for the deal, here’s what I’m going to promise. Here’s how this is aligned. And this might be in smaller groups or the larger group. So for the time being, what we need to focus on is this, because it can create this churn around, we now need to all of a sudden stop, you know, and wait for new instructions. You know, that’s.
I’ve seen this sort of freezing of folks, and it’s like, what we really need to do is, you know, continue on our goals for the quarter, or we need to. What will really may be super helpful is, you know, so, because I think that for many folks, and I think this is where some of the technical folks involved with deals that, whether that be the PE firm, that may be the finance folks that fly in and they just, they do this every day, but a business owner or an employee may only experience this once, so they actually don’t know what to do. So, and it’s not like we’ve practiced the fire drill before, so we don’t know we should move away from the windows during the hurricane or whatever happens to be.
So it’s currently okay because fundamentally, in many cases, day one, nothing actually has changed with what needs to be done today. So the quicker we can get on getting on with our work, the less churn will probably happen initially.
M&A Success Stories
Jennifer Zick: It’s so true. I’ve been on both sides of being in teams that were, whose companies were making acquisitions and being on teams that were being acquired and integrated and I think I’ve seen the scenario where there was really great executive leadership and communication about we’re still doing the same thing. And then changes came slowly enough that we could all absorb them and get around them. And by now we knew our co workers on the other side of the line and were ready to collaborate with them. So it makes a world of difference, that’s for sure. All right, so, Joe, this one’s coming right back to you because you’ve got such a unique experience of being the entrepreneur who had your 15 year, you know, homegrown launch in college business. That was from somebody watching from the outside, such a success story.
And I know it was significant. It had to have been a significant deal for you to consider exiting that business through acquisition and then even being somebody who would stay and lead through integration. So looking back now, what are you most proud of and what would you do differently in hindsight, in leading your team through that?
Joe Keeley: You know, I’m most proud of the things that I and our leadership team did that was considering all the stakeholders. And these things aren’t often what made it to the newspaper all the way down to we had multiple buyers and we didn’t necessarily choose the one that put the biggest bag of money on the table because we had a couple hundred franchisees that their livelihoods more even than I think a typical employee relationship was part of this. So really considering what is going to be the best for the business as an entity and the majority of the people in finding a permanent home, because I think it is such a personal journey when you’re talking about a founder-led exit, and Dan sort of mentioned it a little bit as well.
But I think we need to acknowledge that there isn’t a founder that I’ve seen as of yet that sort of runs a business forever. This is coming at some point, whether it’s a family transition, a traditional transition to employees or whatever it happens to be. So starting to be ready for that. So I would say just really considering the stakeholders is something we did that I’m very proud of. We linked some of the success targets. The way to bridge value oftentimes is initial and contingent consideration. So we brought our team in and they participated in that because we got there together and we’re going to hit these targets together. And that really created for a senior leadership team a bonding moment and a new challenge to go. Because a lot of times it can feel like a bookend where the vision feels done.
And it’s important to say, well, it’s only begun. This is sort of the next stage, things that I guess I would have done differently or better and became a little bit of an aha moment. We’re all sort of in our own little bubble and assume that just because our team hears it from me all the time, we got absorbed into or bought by a company that was, you know, I think 30,000 employees and certain divisions that we worked with knew us well because I met with them quarterly over years and they were an important partner. But the amount of education and showing later on that came to find our voice in that large company in order to do what I promised, which was to highlight those opportunities.
And this is where a lot of times when you’re a smaller company, here’s all the different resources we had. Well, someone needs to navigate that. And that was something that I really underestimated. So I would have a much better plan to do the roadshow in and around the companies to build internal stakeholders and relationships with the senior leaders at the acquiring company because the deal team finishes their job and the CEO who kind of made it all happen. And then, you know, there’s good, better and best in terms of how something is executed. So that would be a reflection I’d have on that.
Advice for Founders Considering an Exit
Jennifer Zick: Awesome. Thank you for sharing. And this next part of the question, I’d love to address all three of you on this. I know we’ve got business owners sitting in the audience today, and this has been kind of fun for me to watch. The Q+A. There’s not a zero question put up. There’s no questions in the Q+A, which is not typical for our webinars. But I think it’s because a lot of people are here anticipating change might be coming and they’re not ready to raise their hand and say, this is me asking this question. And that’s fine. We hope you’re getting value without overtly asking a question. But we do invite you to use the Q+A if you would like to. But I would love to hear from each of you. And, Dan, I’ll start with you on this.
What advice would you have for owners and founders, entrepreneurs listening in who are considering an exit of some kind, or trying to navigate what kind of exit is the right kind of exit for them? What advice would you offer?
Dan Cremons: Considering an exit? I would say the biggest couple pieces of advice. The first is to get clear on what you want. Get clear on your desired outcome, your dream state. There’s a company who I’ve come to know over time called the exit planning institute. This is not a shameless plug. I’m not getting any sort of affiliate revenue from them, but I’ve come to know them over time. And one of the things that struck me about their process, they help business owners go about the process of planning an exit. One of the things that struck me about their process that just so resonated with me is I had this impression that their process was very mechanical. Okay, step one when you go to exit is you need to create this financial model, and here’s what that looks like, and here’s the template.
And as I came to know the process, it actually starts way upstream of that to say, like, what do you want to as a person? Like, what do you want in life? And then this sounds very meta and kind of ethereal, but I think it’s really important because the answers to those questions will dictate what type of exit is most important to me. What are the types of buyers? What’s the profile of a buyer that would most honor what I want for my business, which I put my blood, sweat, and tears into? So I guess the advice is, just don’t blow past that point. We have this tendency, as business leaders, I know, to get very tactical, and, okay, I want to exit. So what’s the roadmap?
What do I need to do next but make sure all that is tethered back to a really clear understanding of, like, what actually might try to achieve in life? And how can this exit help? How does this need to align with that, and how can this help facilitate that?
Jennifer Zick: That’s great advice, Dan. Thank you. John, what would you say to, if you were sitting down for coffee with an owner and founder today who’s thinking someday they want to exit? What advice would you offer?
John Ryan: Oh, I would probably say you are going to exit. How you’re going to do it is the interesting part. I think what Dan just said was spot on. It’s like, what do you want here? Because sometimes you run into people that they’re looking for. Maybe they’re just in North America and they want a global presence, and what does that look like? They want global distribution. They only have it in the United States. Sometimes they’re at the end of their career and they want to wrap it up and move along, or maybe they just got tired of what they’re doing and they want to go do something else. So it’s having, I think I’ll make this quick. It’s just having that talk and just seeing where that goes.
Jennifer Zick: Yeah, I was grateful, I’m a member of Vistage, a CEO forum. And we recently had a guest speaker talking about how to create transferable value, and he had us work through several modules and come up with scores across our business areas of value creation. But kind of the premise for that whole conversation was that, yes, everybody will exit. Right. And every founder wants to exit their business on their own terms and on their own timeline. Some founders do have an appetite to do what you did, Joe, which is to stay with your team through the integration. And other founders know that it would be too hard for them and it would break their heart, and they just don’t have the stomach for it, or they’re done and they don’t want to be tethered to the new organization. Right.
So every founder has a different set of goals. You know, are they looking for the highest, you know, earning return on a deal or leaving off a legacy of some kind, or ensuring continuity for their team or, you know, there’s different reasons that drive this. And I think the other really important takeaway for me from that exercise was that meaningful value creation isn’t something you can make happen one year from your exit. Right. Meaningful value creation is a journey, and it has a lot of attributes to it that can’t start right at the touch, you know, right at the end zone. So I guess for those of you who are owners and founders that are listening in today, I would encourage you to start really working with an outside expert.
If you don’t have somebody in your corner helping you navigate the questions of what do I want? And then how do I build toward that? So, Joe, when you were preparing to entertain offers from potential acquirers, how far ahead of that did you know you were going to be preparing for an exit or a deal?
Joe Keeley: Well, I had actually, for quite a ways in advance, knew that I wanted to go sort of full cycle, if you will, on the entrepreneurial journey, which meant having an exit. And I think we shouldn’t shy away from, especially in an entrepreneur or frankly, any company, we play multiple hats, and there are investor and shareholder returns that need to be. There’s a lot of risk that was put into that. So I would be lying if that wasn’t. There was a lot of work without a lot of pay in 15 years. So that was a factor. But I think that there were a lot of tactical things. I wasn’t prepping a book to go to market. It’s been said that when companies get bought, you don’t sell a company. And that moment happened.
So I really looked out at the market and said, well, maybe this is a little bit premature, then I would have maybe drawn it up. But I did feel emotionally prepared, I guess, at least I thought I did. But there’s an entire webinar about my 18 month spatial around the identity of an entrepreneur that we can do later that I’ll unpack. But I think I would encourage folks to think about it as a Venn diagram. It is, whether it’s an entrepreneur. We’ve kind of gone into the entrepreneur small business, but any sort of company, big company, and I think we want to. There’s a shareholder return, there’s a stakeholder return, and then there’s also this future. We’ll call it legacy and we want and where does that look?
And oftentimes we live in a culture, I think, where depending on who you’re having that coffee with is that those cannot blend together. It’s either or. It is either maximize shareholder value or it becomes a sort of friend factory charity. And it’s like, I don’t believe that to be the case. So I would suggest that folks start listing out under each category what is really important and how can we find not necessarily perfect balance, but at least harmony in what is important to us.
Jennifer Zick: I appreciate that a lot. The balance versus harmony. I used that statement around the concept of just even work life balance, which doesn’t exist. I mean, perfect balance really doesn’t exist almost anywhere. It is about harmony driven from priority, right? Knowing your priorities. And I appreciate that. How in this conversation, even though the platform through which that brings us together at authentic brand is around marketing and theme here is around communication, really the kind of communication we’ve been talking about today is owners being able to clearly articulate to themselves and other advisors and communicate their intent for ownership and for an eventual exit.
The communication that serves to build a business all the way through that journey and then lead all of the respective stakeholders through and beyond that into a future that’s some kind of better state, there’s so many different levels of communication through all of that journey and we still don’t have any questions from our very quiet, observing, only audience. Thank you observers. We’re grateful you’re here. I know all of our panelists would welcome any other questions you might want to take offline. And so all of you have authentic brands contact through me. Please feel free to reach out if there’s something you’d like to tap one of these fine panelists on the shoulder.
We could go on and fill the next five minutes, but I think we’ve landed this in a really great spot, and I’m so appreciative of all of your time and your wisdom and your experiences. Do any of you have any final comments you want to share with the audience before we wrap? And I ask for a little bit of audience feedback through a little quick poll?
Dan Cremons: No, I think not.
Jennifer Zick: No? Okay, good. Wow. We are really succinct communicators. I love that. Well, I did get one comment, not a question, through the chat today. Thanks for all of your insights. And that’s from Jenny. So thank you, panelists. Hey, for those of you attending, I’m going to, if my technology cooperates, put a very quick three question poll on the screen. I would love your feedback. We’d love to hear from you. We want to keep creating value for entrepreneurial businesses, and we hope you got a lot of value from today’s conversation. And I will be putting the recorded conversation out via email to everybody who registered. So you’ll be able to review this content again, share with your teams, think it over, and really appreciate all of you being here today. So thanks.
For those of you filling out the poll, panelists, thank you again, John, Dan, and Joe, I’m really grateful to have you in our circle here at Authentic. Thank you so much. All right, I’m going to go ahead and end the poll. Thanks for that feedback, audience, and we’ll see you next time. Our next authentic brand authentic growth webinar is coming up in October, so watch your inboxes. There’ll be a great conversation. I think it’s going to be the relationship between the CFO and the CMO. Marketing, I don’t want to say, versus finance. Marketing and finance, the critical connection to drive value and growth. Be there. All right, we’ll see you all soon. Take care. Bye.
