company divorces is culture problems , he says . For HUB , an hour-long meeting over video doesn ’ t cut it ; they want to meet with potential target companies in person and have dinner . What ’ s their business strategy , and what might they need help with ? How do they talk about their employees ? Who ’ s sharing in the proceeds of the sale ? “ We have a funny thing at HUB — the more time we spend with you , the more the price goes up ,” says McManus .
He says a main reason cultures so often clash is that the larger company tries to push their culture on the smaller one . HUB does the opposite , he says : “ We ’ re a very bottoms-up organization . The field tells corporate what they need rather than the other way around .”
Culture also affects whether employees stay after the deal closes . Jackson says she ’ s seeing a new trend in negotiations that ’ s likely due to widespread labor shortages : purchase agreements that require a certain percentage of the seller ’ s workforce to accept employment with the buyer on terms and conditions similar to their current ones .
Sellers considering withholding bad news from a buyer — say , that an employee is thinking of suing or a key team member is planning to leave — should resist the impulse , Holcombe says . Most contracts have holdback provisions that let the buyer keep part of the sales price after the deal closes as insurance against problems that emerge later . The seller has more leverage before the sale than after to negotiate how much money fixing a problem is worth , Jackson says .
It ’ s never too early to start planning for a sale . “ You just don ’ t know when someone ’ s going to come knocking ,” Rocca says . Failing that , he advises owners to think three years out since buyers usually want to assess two to three years of performance . That gives sellers time to fix issues with management , customer concentration and more .
Change being hard , there ’ s another sale involved : telling customers , employees and investors why the deal is good for them . In the Bank of Marin-American River Bank acquisition , Myers says that conversation was important because Bank of Marin was the bigger bank coming into the region from outside . “ You have to tell the story . And honestly , one thing we learned is you can never do enough ,” he says . “ There were times where we felt like we were inundating people with communication and the feedback was , ‘ You ’ re not being transparent enough .’ So you ’ re toggling between not overwhelming people with updates and not having them feel like we ’ re not communicating .”
What ’ s success look like ?
It ’ s possible to measure how well deals worked out . For buyers , it ’ s whether the target business gets seamlessly integrated into the buyer ’ s operation , says Lee . That ’ s often measured in profitability , and some acquiring companies keep a separate cost center for the acquired business . Turnover also matters : Top management usually leaves after a deal , but if the people below them don ’ t , that ’ s a sign of success , Lee says .
For sellers , a key measure is whether they were paid what they hoped from the sale , hit their post-sale performance targets and got their earnouts based on making those milestones , says Christopher Russell , a partner at Stoel Rives who handles M & A transactions . Hitting earnouts is a sign that there was a proper transition of the business , he says .
McManus advises selling companies to pay attention to anything they ’ re uncomfortable with in negotiations and revisit what they ’ re trying to achieve with a deal . “ Think about what you want the outcome to be . What do you want it to be for your employees ? What do you want it to be for your clients ? What do you want it to look like five years from now ?”
Eight years after the deal , McVicar says the Bronson team got the outcomes they were after .
“ The culture in our office and the culture of HUB , they aligned pretty darn well ,” he says . “ It was a 10 , and that ’ s not just because my boss might see this . We did good .”
M & A MANIA , LOCAL VERSION
Two area companies are part of a national trend in which merger and acquisition volumes hit all-time highs . Last October , Miami-based World Fuel Services Corporation bought Flyers Energy Group , an Auburn family business that started in 1979 with seven gas stations and whose main business now is servicing trucking fleets . ( See our profile on Flyers in the October 2021 Family Business issue .) Flyers also has diversified into several other lines of business , including lubricants distribution , the supply of wholesale , branded and renewable fuels , and renewable energy . The Flyers team and properties came over to the World Fuel Services umbrella “ intact ,” says Flyers corporate communications manager Chris Haven .
M & A deals among insurance companies were up 40 percent in 2021 , and in May , New York-based USI Insurance Services announced it had acquired Sacramento-based Ames-Grenz Insurance , open since 1968 . “ Our current clients will continue to work with the same local team of Ames-Grenz experts they ’ ve come to know and trust ,” Ames-Grenz CEO Larrie Grenz said in a release .
– Steven Yoder
Steven Yoder writes about business , real estate and criminal justice . His work has appeared in The Fiscal Times , Salon , The American Prospect and elsewhere . Online at www . stevenyoder . net and on Twitter @ syodertweet ,
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