The first months after the acquisition are crucial for the successful integration of the new business, says BDC Consulting Partner Gail Blanchette. “You need an action-plan to avoid missing on essential steps,” says Blanchette, who advises business owners in Winnipeg.
She offered a must-do list during the first few months after an acquisition.
1. Meet
your new people
A change of ownership is a nervous time for employees. That’s why communication is critical. As soon as possible, hold a group meeting with all of your new employees. If your company operates in multiple locations, consider a virtual meeting, through video-call or web-conferencing. “People need to hear the same thing together so that the message doesn’t get misinterpreted around the company,” Blanchette says.
In the mind of many employees, mergers and acquisitions translate into layoffs. Use this first meeting as an opportunity to put people at ease and reduce their fears. Talk about who you are and what your vision is for the business. But don’t promise more than you can deliver.
2.
Introduce yourself to customers and suppliers
A change in ownership might be seen by competitors as a sign of weakness, Blanchette says. That’s why she advises entrepreneurs to think carefully about how they want to introduce themselves to customers and suppliers.
In some industries, it really doesn’t matter who owns the business, as long as it’s business as usual, she says. However, if you’re planning changes or will be interacting regularly with key customers and suppliers, you should make sure to call and meet them as soon as possible.
In an ideal situation, the previous owner will help smooth the way during the transition period by introducing you to external partners.
3. Seek to
understand the business
No matter how well you’ve done your homework and due diligence before the acquisition, you won’t fully understand how a company works until you actually run it. Blanchette recommends that you perform a high-level, non-invasive examination of the business, using a specialized consultant or even your accountant to help you.
Look to broaden your knowledge by answering some basic questions, including: Are things operating as efficiently as you thought they were? Is the company achieving the financial results you thought? If not, what can you do about it?
While Blanchette recommends that you avoid major changes in the early stages, there may be pressing issues you need to address quickly. Blanchette gives the example of an entrepreneur who—three weeks after having purchased a business—had to decide whether to renew a $100,000 advertising contract. “This is one of those moments when your high-level analysis of the business will help you make a better informed decision.”
4. Focus on
your strategy for the business
When buying an established business, you are also buying the previous owner’s way of doing things. “It doesn’t necessarily mean it’s the right or the best way of doing things just because someone did it that way for 50 years,” Blanchette says.
Consider how you want to run your new business and then build an action plan. As well, start working on a two-year, month-to-month cash flow forecast with the new expenses built in, such as loan payments for buying the business, increased salary levels and the cost of what you plan to change.
5. Leave
your door open
Ultimately, buying a new business and integrating it with your existing one is a complex exercise in change management. Don’t be surprised if people still have questions after a few months or are resisting change. Your best ally to fight uncertainty and win people’s trust is to communicate often and ensure you’re being transparent, open and approachable.
For more information on the above, please contact HazloLaw Founder & Business Lawyer, Hugues Boisvert at 613-747-2459 x 304 or at hboisvert@hazlolaw.com
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