Acquisitions on the Brain?

Often with acquisitions, some of the most important considerations happen before and after the deal.  To get an inside take from someone who has years of M&A experience, we sat down with Dennis Ensing, CEO of TransGaming and AceTech Ontario CEO member.  Dennis took us through some key aspects of an acquisition process that can either help or hinder the transaction.

Before Negotiation:

Everyone knows there’s two types of acquisitions, there’s the ones you seek, and there’s the opportunistic acquisitions that fall in a CEO’s lap. As great as the latter are, Dennis feels that as a CEO of a growing technology company, you should always be seeking out targets for acquisitions and have a process in place to do so.  With that being said, there’s some considerations to be made once one of those leads takes fruition.  To a large extent, the M&A process is not core to the business you are running, so they can often be a distraction.  So once you’ve got an acquisition on your plate, something else tends to fall off, “if you’ve got one eye on the business and one eye on an acquisition, then what about financing, what about planning for the exit, what about my family at home?”, says Dennis.  To make sure nothing falls through the cracks, many companies will hire an investment bank to be the front end of the transaction process.  For those who don’t, it’s critical to have someone by your side who’s running point on those areas that you know are going to suffer during the acquisition process (except probably for your family!).  “If I’m running the acquisition process and moving forward with a transaction, the core business better not suffer”, says Dennis, “and I need to know that I’ve got a right hand person who’s pushing that forward towards the objectives that we set and achieving the milestones that we need to so that my ‘distraction’ isn’t affecting them.”

Since an acquisition can take 4-6 or even 8 months before completion (after being identified), it is critical that before you start you have a process in place for what those next months are going to look like and who is accountable for what.  If not, it can take on a life of its own and can end up taking 9-12 months, or even 18.  During Dennis’ investment banking days, he became increasingly frustrated that there was no general overview in place of what the process looks like.  As such he created his own.

Click here for Dennis’ acquisition process & timeline.

After the Transaction:

Have you acquired a company? Congratulations! But there’s a couple things to remember once the deal is done, “If you don’t plan for integration before the closing, you can end up with a real mess”, says Dennis.  Acquisitions take a team, and that team can fluctuate through the process, but it’s important that you’re bringing your key business leaders in at the appropriate times so they can plan before closing and take ownership of the integration.  Part of the integration process includes culture.  After the dust settled with TransGaming’s 2012 acquisition of Oberon Media, they started to make integration related changes, and the top of that list was managing the cultural fit between the two businesses, “Culture trumps everything. People can sit there with the spreadsheet and say ‘oh, that’s what the integration will look like’”, explains Dennis, “but if you can’t marry the cultures, it’s never going to work”.

 

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