M & A SERIES
Money Can ’ t Buy M & A Happiness If Culture Is A Mismatch
Differences in how the company treats customers , how employees support each other , and how management treats employees should raise red flags .
BY PEDRO PEREIRA
Kathy Wagner , Chief Financial Officer - Kaseya
Amy Babinchak , Managing Partner - SellMyMSP
Tom Glover , CRO - Responsive Technology Partners
Tom Andrulis , CEO - Intelligent Technical Solutions
The money has to be right when you buy , sell , or merge a business . But people are what make a deal fail or succeed . That ’ s why it ’ s essential to address the cultural fit when bringing two companies together , experts say .
People shape a company ’ s culture by defining its core values , attitudes , beliefs , and practices in the eyes of customers and partners . Attempts to integrate two organizations with wildly different cultures may work , but a more likely outcome is turmoil — at least for the short term .
“ A cultural mismatch will kill the value of your deal ,” says Kathy Wagner , chief financial officer at Kaseya , who has extensive M & A experience . Kaseya has an M & A Concierge Platform that facilitates target identification of MSP buyers and sellers , helping them with post-sale integration and migration services .
While economics , workforce acquisition , and geographic expansion tend to drive deals , Wagner adds that “ none of these things will achieve their potential value if the acquirer and target are not a cultural fit .”
If employees are unhappy with the integration of two companies , they may stage a mass exodus , taking institutional knowledge with them , says Amy Babinchak , who recently sold an MSP business . She also has a consultancy — SellMyMSP — which helps companies get through the selling process . “ Institutional knowledge retention is something that is often overlooked by buyers ,” she says .
Assess Culture Up Front In Negotiations
Reviewing culture should be a first step in negotiations , according to Tom Glover , chief revenue officer at Responsive Technology Partners , an MSP headquartered in Georgia . Glover sold his MSP to Responsive Technology Partners and has been involved with six acquisitions since .