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Guest: Piers Carey, Co-Founder, Chairman, and CEO of Teneo, “specialist integrators of next-generation technology.”
Episode in a Tweet: A step-by-step plan to master the science—and art—of making acquisitions to accelerate your company’s journey to BIG.
Quick Background: Successful businesses are never content to hit the same sale figures and sell to the same customers over and over again. If getting BIG isn’t important to you, then you’re going to stay small enough for your competitors to step right over you. But if you are on the lookout for ways to scale, acquiring one of those competitors could help you get BIG faster.
On today’s show, Piers Carey walks us through the science and art of making acquisitions, including the challenges, opportunities, and best practices that will help reconfigure your bigger company for BIG things.
Transcript: Download the full transcript here.
Key Insights on Making Acquisitions
1. Have an objective.
You can’t run your businesses like a compulsive online shopper, trying to snap up every “deal” and “opportunity” that flashes across your screen until you’re stuck with a garage full of packages that you don’t know what to do with. If your business is struggling and an acquisition is just another shiny thing you’re chasing after, or one potential fix you’re throwing at the wall and hoping it sticks, then step away from your checkbook, and figure out what’s really ailing your company.
On the other hand, if you know what you want, an acquisition can get you closer to your Huge, Outrageous Target quicker. For Piers, that target was scale, particularly in the US, where his UK-based company didn’t have a big footprint. “We didn’t, and we still don’t, have national coverage in the US,” Piers says. “We have a small team. There’s a tremendous market opportunity in the US. And so, in the States, our acquisition strategy was and is all about giving us additional coverage. Penetrating markets that were not there for us.”
2. Advertise that you’re open for business.
Struggling companies are often secretive companies, run by insecure CEOs who do a poor job of communicating with their employees, their customers, and the general public. You don’t have to open your whole playbook to your business space. But CEOs who are too closed-off run the risk of closing off their business to BIG opportunities.
Initially, Piers thought that a strategy of active acquisition would require a structured process in which an outside agency would help his company whittle down candidates.
“But, it didn’t work out like that,” Piers says. “It seems that the best way of finding out who in the market is interested in a possible acquisition is to make an acquisition and publicize it. So, after our first acquisition, we then just started hearing through the grapevine about other organizations who were possible candidates for acquisitions.”
Now, whenever he meets with players in his industry, Piers lets them know that Teneo is acquisitive – a strategy that has lead directly to more acquisitions, and more business.
3. “The best of both worlds” is worse for everyone.
It sounds like the smart strategy: take the best of what two companies have to offer, and combine them into something even better.
But in practice, the result of an acquisition is one company. And one company needs one culture, one guiding vision, and one BIG goal, all set by one person: you, the CEO.
“I think the culture of my company is MY culture,” Piers says. “It’s what I think is important. So, if I’m trying to move away from that, ultimately there’s a lack of personal integrity there. I’m not really truly going to believe some of the things that are in this other culture.”
In other words, in an acquisition, one culture plus a different culture can’t equal three. There will be personnel redundancies. There will be different meeting rhythms to resolve. There will be two sets of routines, strategies, and cultural expectations. When deciding what stays and what goes, your vision as CEO has to be the determining factor. And again, the better you are at communicating that reality early on to everyone involved, the smoother this transition will be.
4. Know your role.
Huge companies might have specialized divisions that handle acquisitions. If, like Piers, you don’t have that luxury, you and your senior leadership team need to hammer out a process and divvy up responsibilities.
Piers appreciates that handling key relationships is one responsibility that the CEO can’t delegate, and he continues to own those relationships throughout the acquisition process. “I’m the deal maker,” he says.” “That’s really my role. I’ve built the relationships with the people in the organization. We have someone in the business who focuses on legal due diligence. The CFO works on the accounting side and the finance side. But, my role is absolutely about the relationships, pulling it all together, driving it through, and making it happen.”
Having this structure in place is crucial, because even if you’re buying a smaller company, an acquisition is no small thing. There are countless details to sort out, potentials for distraction and lack of focus that must be avoided, and nervous employees to manage. Good CEOs know that they can’t do every little thing – just the most important things that are going to help the company through this process and come out BIG.
1. Buyer beware. Have a strategic objective for the acquisition, and make sure your target’s culture is a good fit with your own.
2. One company, one culture. The CEO – alone – determines both.
3. A group effort. Let your number-crunchers crunch the numbers while you manage the big picture.