the role of *people* in an acquisition

June 12, 2008 at 10:48 am | Posted in Business, Professional Development | 7 Comments

Mike made the following comment on my post about technical challenges to organic growth:

I think some folks are concerned about acquisitions because, when they sometimes fail, they draw so much negative attention to the company that it makes a bad impression on the whole process. A good CEO and management team can successfully integrate a piece of technology without toppling the whole house of cards.

I agree, and  Mike’s comment about “toppling the house of cards” got me started on a bit of a tangent thought.  The longer I’m in business, the more I realize how much of it is about PEOPLE.

First, there are the people who did the acquisition. No matter how much diligence you do, no matter how thorough the integration plan, some will simply not work as intended. Then what?  Will finger-pointing ensue? Will terminations be demanded? Will that consensus that was built fall by the wayside? That, to me, will test the metal of the company and the character of the its leaders.  Will folks be sacrificed as the scapegoat?  Will they be beaten (psychologically) into a shell?  Or will they be encouraged to learn, grow, and do better the next time?

Second, there are the people being acquired. I think the most common weakness in diligence processes is the assessment of personalities of the target company and the integration plan for them, as PEOPLE, into the new company.  It is a very difficult thing to manage, especially when you’re so focused on the pure “spreadsheet” aspect of the deal.  It can make or break a deal resulting in an awful lot of money being made or lost, so it’s worth the extra effort.

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