Over the last two years, my janitorial company had been looking for our first acquisition to help with expansion into new geographic territories. While we had not saturated all our existing markets, new growth in those markets was getting harder to achieve. However, as we pushed outward in geography, we began to face certain challenges that came with acquiring new business further and further away from home base. About seven months ago, we identified a company in one of our target growth markets and were able to close the deal within a relatively short period of time. However, being our first acquisition, there were many unknowns and things to learn. Here are three lessons we’ve learned.
Communication Is Key
I cannot begin to express how much information is exchanged during the due diligence and transition phase of an acquisition. We spent hours pouring over financials, looking at contracts, meeting team members, negotiating terms, drafting and refining agreements, and so much more. Every time new information came in or a change was made, lots of stakeholders were affected. We have learned that open and honest dialogue from start to finish is critical. Everyone needs to know everyone else’s intentions, desires, and hope. No secrets are allowed. Not only does a large quantity of communication need to happen, but it needs to happen very regularly. This is even more important after the deal has closed and you are working to transition.
Culture is Everything
At our company, culture is everything. If you aren’t a good cultural fit, you won’t last on our team. Therefore, when we looked for a company, finding a seller with a similar culture was necessary. While everything wasn’t perfectly aligned, there was enough alignment to work with. However, from day one, we emphasized the culture and made significant strides to infiltrate and influence the new company with our culture. The fear and uncertainty of the new team was able to be mitigated through a strong cultural message from day one.
Finally, and I can’t take full credit for this, we made it a bold declaration from day one that nothing will change. New team members and customers are wary of change. Everyone is waiting for you to try something new and screw up. Everyone is suspicious of changes you bring to the table. With each rock of the boat, morale and performance decline. Our motto to the new team was that nothing changes except you now have a full support team behind you to help and cheer you on. And we meant it!
We’ve learned much more – probably enough to write a book. For instance, changing payroll periods by a couple of days is not well received. Accrual accounting in one person’s mind means something different in another’s. And I could go on and on. But at the end of the day, these three lessons learned became what I hope is the foundation for the success of this acquisition. Only time will tell, but we are very excited and hopeful.