M&A Never Goes Out of Style

Despite the ebbs and flows of economic cycles, mergers and acquisitions never go out of style. According to Harvard Business Review, each year, companies spend more than $2 trillion trying to increase their profits and reach by taking on a new partner. However, repeated studies reveal an overwhelmingly large majority of those businesses — between 70% and 90% — flat-out fail. Financial goals are not met, leadership styles clash, and companies crumble.

As president of Atlanta-based ExecuSource, I had been considering taking on an investor to assist me in my growth objectives for the company. In 2016, New York-based J.W. Michaels & Co. became that partner. Since we embarked on our partnership, ExecuSource’s profits have increased by 85% and we have increased employees by 40%. This year, we are hoping to double our year-over-year revenue. Taking on a partner has provided additional resources, capital and expertise to grow our business.

However, this success took a great deal of effort, honest (even sometimes uncomfortable) conversations and self-reflection over many months. Here’s what I’ve learned about how you can take your dreams of forging a partnership to a successful reality.

PREMIUM CONTENT: Mergers and acquisitions database 2017

Be Extremely Open and Honest with Yourself About What You are Looking for

Service in the staffing industry is at a premium these days, and it is the hallmark of who we are. As such, we wanted a partner who is just as fixated with service as we are. We also wanted a partner who would insist our current leadership would remain in place to bring the company to the next level.

Many of the partnerships I see fail do so because a company’s leadership team does not have a clear and complete vision of what they need out of the partnership. Subsequently, they are not able to properly communicate their honest expectations to the other side. Self-exploration is necessary to figure out what kind of partner you want, and what is and isn’t acceptable to you. Then, you can begin the hunt.

Vet Until You Find Your Ideal Partner

After months of having conversations with investors and holding companies in search of the right partner, I anticipated the right match just did not exist. However, I eventually found the perfect partner whose culture and goals matched mine. They were also obsessed with their service, and they wanted the existing president to continue to lead the company.

Once you’ve found a potential candidate, communicate your wants, needs and expectations — from financial goals to leadership styles — to see if their goals and expectations match yours. Be extremely upfront with what is important to you and bring it up not one or two or three times but many, many times. If the partnership is a near-fit, but doesn’t fit perfectly, you must walk away. The marriage has a high chance of becoming a disaster.

Begin the Partnership with Lots of Communication

For the first few months, we communicated relentlessly for hours every week – a sort of courting process. We discussed everything including what kind of people we want to hire, potential markets, office space and most importantly, a multi-year plan. Our hourly phone calls lasted about five months until we grew into a rhythm and forged complete trust. We ran into disagreements along the way, but approached the differences with respect. The extensive planning allowed us to hit the ground running when the deal became official, and the results have been exciting and compelling. In addition to the increased profits and employees, we’ve entered three new markets — Washington D.C., Denver and Greenville, S.C. — and added one new vertical, human resources.

With a partner, we’ve been able to grow much more quickly and strategically than we would have been able to on our own. We’re able to collaborate with our partner for best practices, assistance in identifying talent and guidance on our strategic plan — all while maintaining our brand and values. By doing some soul searching, conducting an extensive vetting process and fostering open communication, your merger or acquisition won’t be another failed statistic.

MORE: Staffing M&A: When A Buyer Calls

Frank Green

Frank Green
Frank Green is president of Atlanta-based ExecuSource.

Frank Green
Frank Green is president of Atlanta-based ExecuSource.

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