By Brandon Miller, president and CEO of Cleveland-based HW&Co.
Brandon Miller
Over the past four years, we have merged three companies into our firm. To be sure, there have been speedbumps along the way. But there have also been valuable lessons that have clarified the way we view acquisitions and our approach to them.
To be successful, mergers must be guided by a central principle. For our firm, the central principle is culture. A merger of two firms that live by the same values treat their people and clients well – and recognize and embrace the right growth opportunities – leads to success. In our case, mergers are not just about getting bigger. They are about getting better by bringing talented people to the table who can share their knowledge with us and our clients. In return, we share our resources and expertise with them and with their clients. Through that process of sharing resources and expertise, over time our people bond and we become one firm.
Our culture-oriented approach is not the only one that works, but it works for us. Other firms may seek business combinations that make them bigger, that eliminate their competitors or that solve their labor shortage by bringing in new people. There is more than one way to achieve growth.
Finding the guiding principle that works best for a particular firm must go to the core of who you are as a firm. Trying to fake it won’t work. If your firm lives by a fast-paced competitive culture that values revenue growth above all else, trying to woo an acquiree by selling a message of valuing people and work-life balance won’t work. The truth will emerge quickly, and if the merger has already happened, you may well lose many of the people who came along with it.
Lesson No. 1: Know who you are, be yourself and find potential merger partners who are truly like you.
During the talks leading to a merger, the instinct of many partners in target companies is to keep things under wraps. Sometimes, they don’t even let their key managers know that they are in talks to merge the firm. Consequently, when the combination is announced, many people are caught off guard. They may feel broadsided and worried about their jobs.
That’s not a good way to start a relationship.
We have found it advantageous, when the talks are at the right point, to go into the target company with our senior managers and talk with their senior people about the opportunity and the synergies of our two companies joining together. It’s a time to build excitement and get internal buy-in that can help move the talks to the point of closing.
Granted, it’s risky. Everyone has to sign NDAs, and there’s a fine line you have to walk. You’re still in the negotiation phase with their firm while you’re trying to communicate and build positive anticipation, and the owner could pull out at any point. A lot of firms aren’t comfortable doing it this way.
But that openness and communication is why we’ve had the success we’ve had with integrating our merger partners into our firm. It results in people feeling valued and heard from the day they join our firm.
Lesson No. 2: Do the hard work and communicate.
It’s important to share your strategic plan with a potential merger partner and make sure the leaders of that firm understand how they would fit in. If your strategic plan is written to encourage different approaches to growth, it helps encourage a merger partner to envision the combination and to understand your guiding principles. It also builds an understanding of what life will look like on the other side after the deal is done and their firm is doing business under your banner.
Will their processes and procedures be chucked out the window? Or will you share ideas and adapt some of their processes that you see as valuable? Will their specialty practices that are adding expertise to your firm still provide leadership opportunities for their practice leaders?
Some owners won’t care about these issues. They are retiring and they’re looking for an easy exit. But the ones who care about their people and their legacies will care deeply. And that’s where culture and values come in.
Lesson No. 3: Reread lesson No. 1. Know who you are.
