Survivor, Corporate Acquisition Edition: The Transition Period in an Acquired Company

We’ve already been on the buying end of acquisitions ranging from the wildly successful (WikiAnswers) to the unsuccessful (Brainboost) to the aborted (Dictionary.com). Being on the receiving end has exposed me to a very different series of enlightening experiences.

We’re currently in Survivor Phase. The acquisition has been completed but the new organizational chart has yet to be set. To be clear, most people’s efforts today are focused on work, particularly in determining our goals and setting out to accomplish them. And yet in many cases the work takes place within a larger subtext of self-promotion, jockeying for position, and the occasional backstabbing.

Individuals (formerly known as teammates) perform tasks that they’d ordinarily leave for others. They box out competitors (formerly known as colleagues). They give ever so helpful feedback to key decision makers. They write snarky blog posts (I’ve heard).

There are some benefits the company gets from this audition period, including:

• The acquiring company gets a glimpse of how people perform under pressure.
• Work gets done faster than usual.
• There’s a focus and intensity that often leads to greater output.

However there are also downsides, potentially including:

• The glimpse as to how individuals perform while auditioning may be a very poor indicator as to how people perform day-to-day.
• The work that was done more quickly often needs to be redone correctly.
• Significant and often irreparable damage may be done to the relationships people have with each other and with the company.
• The people you most need leave; the people you least need appear to shine.

Acquiring Company Key Steps

For the acquiring company, here are some key steps to take:

1. Decide what your main goal for the transition is

Most specifically, which of these is your primary goal:

1. Build the best team to move the acquired company forward
2. Learn all you can about what the team does so you can take it over

In either case you want to learn all you can about the team, the technology, the processes, etc. But if you’re primarily focused on Goal #2 you’re unlikely to succeed particularly well on Goal #1. So start by deciding what your primary goal is.

The following steps assume that you’ve chosen Goal #1 as your primary goal.

2. Learn about your people

Obviously watching your people perform is an important step in evaluating them, but be careful about the following potential sources of error:

• As Heisenberg noted, in some cases you change a system significantly when you observe it.
• You may naturally end up evaluating not what people contribute to the team, but how well they communicate with you. So for example native English speakers may rise to the top.
• Beware of misplaced confidence gap. In Future Babble (an excellent book) Dan Gardner discusses how we’re naturally drawn toward highly confident people and away from people who better understand nuance and uncertainty, even though the latter group generally makes better decisions. Be careful.

If you want to build a successful team you’re going to need to talk to the team members and get their opinions of each other. Yes, you need to filter for bias. People are jockeying for position. Even those that have already booked passage off the island are biased by how much they like and respect their teammates. But talk to enough people, with the proper level of skepticism and caution, and you should get a good idea of which people most help the company. Make sure you’re talking to the rank & file and not just to managers. The nature of organizations is that subordinates understand their managers far better than managers understand their subordinates. For each person, pay most attention to the opinions of people who work closely with him or her.

3. Build your team

This part is a two-way street. As you hone in on who you want, make sure it’s mutual. You may want to keep your cards close to your vest and announce them to everybody all at once, but that’s likely a recipe for failure. Don’t forget that:

• You need to earn trust, build confidence, and create something great with your new team. You have to trust them for them to trust you.
• Now is the time to see if you can work with these people. If you can’t include them in the decisions regarding the team, they’ll assume (probably correctly) that you won’t really include them in other decisions.
• The last thing you want to do is to count on somebody who has little desire to be part of the team you put together.

4. Don’t take too long

This period can be traumatic and dangerous. The worst part is that some of your team members will feel they’re playing a zero-sum game against each other. You want your team members’ interests and desires to be aligned, so they’re focused on working together to build something great. You’d like to minimize the days spent trying to throw each other off the island.

Acquired Company’s Employees

If you’re in an employee of a company that just got acquired, here’s some advice:

• Sitting back and saying “I don’t play politics, if they don’t know how good I am then I don’t want them” is rarely the right approach. If there’s an upheaval potentially coming, figure out what role will best help you serve the company, find happiness and fulfillment, and advance your career. If you like your current role and are confident that it won’t change, you can ignore this. Otherwise, determine how you best want to serve the company and communicate that.
• Have a thick skin. These transition periods are temporary, and the new reality that settles in may or may not be great for you. Don’t throw yourself off the island because the transition period is rocky, or because you’d rather jump then be thrown.
• Be sensitive to the damage you may be causing others. You’re playing with other people’s lives, careers, reputations, and financial and emotional well being. Do the right thing. We may argue about what the right thing is, but make sure you’re thinking about it and making a decision, not just harming others through carelessness or selfishness.
• Remember that in addition to any ethical issues, hurting others often has a price. Decide whether or not you want to pay it.

Conclusion

The period between when an acquisition is finalized and the new organization chart is set can be both critical and traumatic. If you’re on the acquiring side, make sure building the ideal team is your primary focus, and that you’re moving forward quickly and intelligently to get the right team in place. Make sure you’re talking to the rank & file and not just to management to understand who really contributes what.

If you’re an employee whose company was acquired, consider how the landscape may be changing and where you may best fit in. Make your case. Be aware of how you’re affecting others. And take a deep breath and stand tall. This may be an opportunity to find the role where you can best serve the company and find happiness and fulfillment.

To sum it up, an acquisition is generally only as valuable as the team that will be moving it forward. Whether you just bought a company or are a member of a company that was just bought, do what you can to use this opportunity to get a great team in place.

Postscript: I’ve received feedback that I’ve exaggerated the amount of politics and positioning going on, whereas in fact most people are really just focused on doing their jobs and working productively with their teammates. I accept that. It’s the exceptions that stand out. Given how much tension in the air, the amount of teamwork and goodwill is actually quite impressive.