HR Management, HR Technology

5 Things to Help Get Off to the Right Start in Technology Acquisitions

advice

You are going to come under the microscope as soon as you announce your deal.

The target employees will watch everything you do and judge each action. You have one chance to make a positive impression and create the framework for longer-term trust.

If you make a fatal error at this stage, it’ll be hard to ever recover. However, if you start off right, you can potentially increase the odds of a successful acquisition threefold.

Getting employees to take a leap of faith

The deals in Silicon Valley are not about ripping apart a company or liquidating assets but instead, focus on securing cutting edge technology and talent. A key factor in the longer-term success of a technology deal is having the talent onboard to ensure you can produce the next generation of the product.

Companies like Salesforce.com and LinkedIn understand that there is a limited period of time available to engage and entice target employees. They know that an acquisition affords them a unique opportunity to grasp innovative and rare talent that doesn’t typically walk through the front door.

The early moments of an acquisition set the tone for things to come. The goal is to get employees onboard and willing to take a leap of faith – and join the company.

In Silicon Valley, deals are practically a daily event. We’ve captured some of the best practices to ensure you gain the target’s trust, respect, and partnership.

Five things to do to get off on the right foot

There are five simple things that you can do to start off on the right foot with target employees.

  1. Sign key employees prior to announcing a deal. Make sure that you have signed employment letters for each of your key employees prior to announcing the deal. This step is important for two main reasons: first, you can be sure that the key leaders of the target company are clear as to their role and committed to joining the company. You’ve closed out their personal concerns so that they can be the leaders you need to focus on helping you bring on the rest of employees. They have a personal stake in making sure others commit to the company, just as they have done. Second, you’ve protected the company from being held hostage later. You’ve locked in key talent you need to help integrate the technology.
  2. Be ready to communicate the basics. Employees are going to be faced with family and friends pestering them with questions as soon as the deal is announced. You can help them feel better by answering as many of their questions as possible (e.g., do I have a job?, what happens to my benefits?, etc.). If you don’t have all the answers, then you need to let them know when you will. Employees will not focus on anything until they know they have a job, so the quicker you get them their answers, the faster they will become productive again.
  3. Equip yourself with knowledge. It’s important you’ve done your homework on this team. A common mistake in the Valley is to forget to ask about their exit strategy. Announcing an acquisition can turn into a disaster if employees were expecting the company to go IPO and instead, they were just acquired. Or employees can be resistant and hostile if they’ve been through a previous bad acquisition experience. Talk to the leadership team to obtain the company history, learn about the employees, and get any sacred cows out in the open.
  4. Align the announce events and communication to the target company’s culture. Have the target company drive the “style” of the announce events and initial meetings so that it aligns to their own culture. You don’t want kick off events with Power Points if they prefer small group discussion. It will speak volumes when you take the time to customize your messages in a format that is receptive to the target team and doesn’t scare them away. Remember, they fear becoming part of the “big company machine” and you can start reducing those fears by applying some flexibility in your own style. However, this does not mean that you shouldn ́t drive the messaging and activities that will take place. It’s still important to make sure your business needs are met in the announce process; just be flexible in the approach.
  5. Pick the best time of the week to announce. This should be an easy one, yet so many companies get it wrong. The ideal day to announce is a Tuesday or Wednesday, since this provides Monday to finalize any signatures or planning and then a few workdays after announce to ensure communication with employees. You don’t want employees to go into a weekend or holiday without easing their concerns with information. Otherwise, they’ll be home searching the web for a new job. Give them the information you want them to mull over for the weekend…don’t let them create their own.

If employees are impressed at the beginning, they will be more willing to forgive you down the road if you stumble or make a mistake. Kicking off a deal in the right way is sure to set a positive tone moving forward, helping you tackle the more complicated integration challenges with the essential support of the acquired/new team.

It all starts at the beginning.

Shari Yocum is managing partner of Tasman Consulting LLC, a strategic M&A human capital advisory firm based in San Francisco. Launched in January 2011, Tasman offers a broad range of human resource integration consulting and solutions. Prior to co-founding Tasman, Shari was an executive at Cisco Systems, where she led their HR Mergers and Acquisitions organization. She has also worked for several Fortune 500 companies including PriceWaterhouseCoopers, Nortel, and Management Systems Associates. Contact her at Shari@tasmanconsulting.com.
  • Jacque Vilet

    Another thing.  Decide whether or not you are going to layoff people before deal signing/announcement.   If you are going to do layoffs —- do it quickly and move on.   Waiting for the other shoe to drop is excruiating for employees, creates negative feelingss towards the acquiring company, leaves questions about job security and interrupts business.   Just announce it, do it and get on with business.

    One company I worked for:  all employees got an email announcememt to attend a conference call in various conference rooms throughout the country at a specific time.   All together —- not 4-5 group calls strung out over the day.   On conference call CEO announced there would be layoffs that day.   Go back to your desk — your manager has a letter waiting for you.   If you are being let go your boss will wait til you pack/boxes ready and you will be escorted to the door.  If your manager hands you a letter that says you are staying you are safe.    Another email asking employees to another conference call at designated time —- again everyone at once.   CEO said “it’s all over — no more layoffs —-let’s get back to work”.   Most impressive method I have seen.   Announced, done and over with —- all in one afternoon.

  • Kieran Mc

    Well done Shari, I hope this is just the first in a long line of common sense articles on M&A from you.
    I have just been involved with an Acq where the execs took great care of the deal but paid no attention to the business while it was all going on. While the ink was drying and the deal makers were patting themselves on the back for a job well done the exceptional people were already heading to the door. Protect your assets even before their yours. Be clear on what your buying. Make sure you get what your paying for.