When you’re a small business owner or founder of a startup, there’s a good chance that somewhere in the back of your mind, you’ve imagined what it would be like to grow your company to the point where it’s bought out in an acquisition. For many business owners, the prospect of being acquired is one that’s filled with excitement, big plans, and high hopes.
But when the day finally rolls around, one year -- or 20 years -- later, you’ll realize that nothing can prepare you for what it’s like when you agree to hand over the reins of your company to someone else. It’s with this post that I hope to better prepare you.
Being on the other side of a recent acquisition, I can honestly say that the acquisition process is a roller-coaster ride like nothing else. It’s a priceless feeling -- a wave of elation and at the same time, a great sense of loss. You founded this company, and your hard work and sleepless nights went into making it what it is today, and soon it won’t be yours any longer.
There’s also the impending feeling of stepping out into the unknown, like standing on the edge when base jumping. When it came time to hand over ownership of my company, Renters Warehouse, to someone else, I realized what a huge, monumental decision it was. I also started to wonder -- who am I if I am not the founder / CEO of my business? After all, this is all I have done for many years. I realized quickly that by selling my business, I’d likely have to reinvent myself.
If you’re considering an acquisition, you’ve undoubtedly done research on the legalities and the financial implications of selling. But there’s not much out there about the acquisition process itself -- the hands-on details, the practical considerations and what you will go through as a person if ultimately successful.
What is it like when you sell, and once the deal finally goes through, what happens next? If you’re facing an acquisition, here are a few tips that can help you to make it through this next chapter in your life.
1. Expect your role to change.
If you’ve decided to stay on with the company, or if the contract stipulates that you’ll be on for a specific period of time, expect your role to change. You’ll be reporting to someone now instead of the other way around. As an entrepreneur, this can be extremely difficult to adjust to this new dynamic, but try to keep things in perspective. In my deal, I understood that this would not be a good fit for me or my partner. We had been operating too long without oversight as founders of the business, and micromanagement by anyone was something I knew I would not handle well.
We went through several rounds of negotiations to get to the right control structure, and my own independent contractor agreement. It was important for me to still offer guidance to the business, but continue to be my own boss.
So, are you open to having a boss? If the answer is no, then you better structure your deal accordingly.
2. Don’t play favorites.
Avoid playing favorites. Welcome the new team -- don’t view them with a skeptical lens. “If you’ve run a successful start-up, you’ve likely attracted first-rate talent to join you, says Scott Weiss, founder and former CEO of IronPort. When IronPort was acquired by Cisco, it took time for IronPort to get used to the new talent.
“We suffered from a perception of an IronPort takeover that was hard to reverse,” says Weiss. “I should have taken more time to evaluate my inherited Cisco team, and let the cream of the crop rise naturally.”
The faster you can merge cultures and blend them into your business, the faster you can get back to work. Having a division amongst older, founder-hired staff and newly-implemented staff will only lead to staff turnover, dissent within the ranks and additional ugly issues no healthy business needs to face. This direction needs to start at the top. Staff will look to you as their leader to make sure you vet out a new leader for them, and when in place, welcome them into the fold.
3. Adjust to a new company culture.
Getting different cultures to mesh can be difficult and can be a shock to the system for employees on both sides of a merger, says Elisa Hukins, cultural integration leader for Mercer, a global human resources firm.
After any merger or acquisition, there’s an adjustment period as the different cultures come together. Try to do everything you can to help the culture transition to be as smooth as possible. It’s important to recognize that this change is normal, and to work closely with your team and the higher-ups, maintaining open lines of communication and helping to manage expectations.
4. Remind yourself why you’re doing this.
After the sale, you’ll have times where you’ll second guess yourself. Was this the right partner? Did I leave money on the table? Was now the right time? I promise you this -- you will almost never get the amount of money you had hoped, the perfect partner and at the perfect time. If you are waiting for this to happen, I hope you’re not holding your breath.
This is true no matter how much the deal was in your favor. It’s important to remind yourself that you made the best decisions with the information available at the time and to move forward from there.
5. Trust your team.
I realized when growing my business that success came from having a good plan and then trusting my team enough to make the plan a reality. The same was true when working with the group that acquired Renters Warehouse, both during the acquisition process as well as after.
In my transition out of my company and my move into that of a board member, their team was pleased to see how well I had adapted from being the sole decision-maker into a role that was a bit more low-key, yet still highly influential. My philosophy is the same as when I ran my business. I listen more, speak less and let the team fail or succeed on their own merits. I have trust that they have the company’s best interests in mind and will succeed.
6. Start your next chapter.
What’s next? You don’t have to retire to a golf course or fade from the world of business. As for me, it’s too soon to tell what the future holds, but I’m excited about the opportunities that lie ahead. I know that no matter what I choose to do, I’ll be looking for a chance to break new ground in both my personal and professional life.
Use this time away from your company to discover what drives you, reconnect with friends and family -- as a person, independent from your company. Rediscover your identity, or take some time to travel. It’s not often you can decompress and recharge your batteries. A certain clarity comes back to you when you start to experience boredom again. It can be inspirational feeling to be bored. When you are bored, you start to think -- “What can I do now?” Write a book, take a class or start a new business. The sky’s the limit.
Coming to terms with your new role in the company can be difficult, but it’s important to recognize that change is a necessary part of reaching your goals. As with any new venture, there are challenges but nothing that can’t be worked out. Remind yourself that this transition period isn’t forever -- it’s just your foray into the next chapter of your life.
Are you facing a potential acquisition? What challenges have you met along the way?