In the 1990’s I was the CIO of a very fast growth company. We grew from $30 million in revenue to $700 million in 5 1/2 years, , , and we did much of it by acquiring other companies.
In all, we acquired over 35 companies, , , that’s an average of 7 new acquisitions a year. We were an acquisition machine.
In one acquisition, we acquired a company who had also been purchasing companies, but they had not done very much to consolidate the companies they bought. Our due diligence showed us we were buying a company that was actually running like 10 separate companies, , , all using different technologies and all in different cities around the US. The only thing standard among them was Payroll, Purchasing and Accounts Payable.
One of the ten entities had a totally different business model than the rest, , , and it did not fit our business model. This company entity provided service bureau services to our competitors, , , something we certainly did not want to continue doing after the parent company was acquired. The other nine entities, , , great, but the one that was different needed to be eliminated.
Because this company entity provided a technology service, it fell on me to handle the closing of the office and the services offered to their clients.
Early into my due diligence, I began sizing up what our transition plan should be and quickly realized that for it to work smoothly I would need the help of the general manager. His name was Dan.
I decided to confide in Dan and seek his help in developing the transition plan, , , a potential risk if he did not handle the information properly. After all, our plan was to announce to his team the week after the acquisition would be announced that we were going to close their office. That meant 15-20 people would eventually lose their jobs and some number of clients would no longer have the software capabilities they had been using.
There is also big risk to our company if we do not handle such a transition well. Fortunately, our company’s CEO and senior management team operated with the philosophy that if we take care of clients and employees as we acquire companies, , , good things will happen for us. If we don’t we will encounter big problems.
Taking care of clients and employees does not mean continuing to operate a business that does not make sense for our company. Stepping up and making tough decisions is still required, but how we go about implementing these decisions is key.
Back to Dan.
When I confided in Dan what our plans would be and asked for his insight and help in developing a workable transition plan, , , he asked me two questions:
- “What are you going to do to protect my clients?”
- “What are you doing to support my employees?”
WOW, , , I was impressed by such a mature approach. Most managers in this situation would be focused on themselves. I never heard, “What are you going to do for Dan?”
Dan and I developed the transition plan and after the acquisition was announced we delivered the message we were going to close the office, , , to both Dan’s employees and his clients.
The good news, , , there were no employees who went without work and no clients went out of business. We gave everyone a reasonable amount of time along with transition support and options that helped protect their interests. We took care in how we implemented the decision to close Dan’s business.
Even though the clients were essentially our competitors, , , if we had handled their transition poorly it would have sent a negative message around the niche industry segment we were in and could have caused us many challenges down the road.
Later, I hired Dan to help me assimilate the IT support of the other nine entities purchased in the deal, , , and over time he has become a valued colleague and friend. In fact, our families try to get together once or twice a year and Dan has even traveled to Johannesburg, South Africa with me on two IT Manager Institute trips.
Dan has published a book titled, The Rain. CLICK HERE for details.
In discussions about mergers and acquisitions, I’ve heard Dan say things to the effect that he and his people did not like our decision to close the business at the time but understood it, and the way we handled the transition really helped everyone make the adjustment.
The lesson here is that when you have to make tough decisions, be sure you think through how you take care of clients and employees.