Firsthand view of acquisitions

I am no stranger to acquisitions. I’ve seen experienced them from both angles: at PGi we went on an acquisition spree (where we acquired 4+ technology companies in the span of 18 months) and at Spunlogic we were the acquisition target of the Private Equity firm Halyard Capital.

I learned several valuable lessons from both of these experiences:

  1. Fish eating fishAcquisitions are rarely smooth transactions. Acquisitions require negotiations and on multiple occasions the terms of the deal would hit a snag. The inevitable delay — either days or even weeks — would also result in a roller coaster-like experience where the deal was on and then off and then on again! It was incredibly frustrating for those that knew about it since things that seemed to be settled would have to be changed over and over to accommodate the new terms.
  2. The buyer, not the seller, gets to make the rules. The acquisition also meant that employees at the target company were going to lose some benefits. Most of the times it was as small as an HR benefit but sometimes it was bigger — much bigger! I recall the day that employees realized that the company cruise ceased to exist.  It was a huge disappointment, to say the least.
  3. It takes a long time for the dust to settle. Acquisitions are about companies and cultures coming together and that kind of meshing isn’t instant. It took months and multiple long nights for the Finance department at PGi to integrate the billing systems from the various acquisition targets. At Spunlogic, it took us a good 12+ months to get over the acquisition distraction and to refocus on the work/clients (which Jeff Hilimire recently talked about in a blog posted here).
  4. The value of the acquisition may never materialize. In a seminal HBR paper on acquisitions, it was reported that more than 60% of acquisitions “provide zero or slightly positive but disappointing returns on investment.” That may seem surprising, especially when considering the non-stop pace of transactions over the past few years, but there’s also truth in the findings as some acquisitions take longer to bear fruit. For example, it has taken Apple 3+ years to fully leverage the streaming technology from the Lala music service acquisition in the upcoming release of iTunes Radio service. In acquisitions, you don’t really know what you’ve got until it is yours.
  5. There’s always another player ready to be acquired. There’s no shortage of technology companies or independent ad agencies.  Just look at my latest slide of notable agencies in Atlanta — there is no monopoly on talent!

The biggest lesson of all is that an acquisition also brings great opportunities. I used my acquisition experiences to expand my network, learn new professional skills and overcome bigger challenges. I just found that I was lucky to be at the right place at the right time.

What other valuable lessons have you learned from an acquisition?