M&A transactions can disrupt the culture of a company if the right approach isn’t taken. At Kratos Capital, LLC, we are a group of M&A advisors and investment bankers that have seen our fair share of cultural transitions throughout sell-side deals. We understand how things can go wrong and we take the necessary steps to ensure cultural changes work out well for buyers and sellers alike.
Don’t let your next deal sink because your employees jump ship due to culture shock during integration. Read on as we take a quick look at two key strategic approaches we take towards culture during a middle-market M&A transaction.
Look for Buyers With Similar Leadership Values
Your leadership is what retained your employees over the years. This retention added value to your business and could be one of the key reasons why a buyer is interested in the transaction.
One of the biggest downfalls in a deal is when employees get wind of the acquisition and don’t agree with the leadership values of a buyer. This often results in high-ranking and key employees leaving and diminishes the value of your business.
We advise being selective of who you add to your short-list of buyers. Hunt down prospects who have the same or similar leadership values that reflect your current culture. Doing so will help mitigate any jarring turnovers during the transition period, and allow the new buyer to feel confident in the value of your company.
Ensure Different Cultures Don’t Stall Decision-Making
Before the deal is complete, buying and selling teams should hold meetings that help iron out the wrinkles of potential culture clashes and ensure these differences don’t impact the decision-making involved with the final touches of the deal.
Work with the buying team and help them understand the important decisions that will need to be made post-acquisition. From how they’ll handle the initial transition, to how they plan on dealing with benefits for retained employees; clashing over how these decisions are to be made will not only stall the deal but will ultimately result in lost faith and turnover amongst your workers as time goes on. This drop in an essential transaction KPI leads to a decrease in value and prevents you from selling at your rightful price at the end of the day.
Keep in mind, this is not a “my way or the highway” scenario. Both teams should work together and strive to combine two cultures into one that (at least for the immediate future) will make the transition a smooth one for all employees.
Approach Your Transaction Tactfully With Kratos Capital, LLC
At Kratos Capital, we understand that the retention of culture in your company after an M&A transaction is one of the main goals at the end of the day. We want your employees to be comfortable with cultural changes, and that’s why we strive to find only the most qualified prospective buyers for our clients. Start your sell-side transaction the right way, with our investment bankers. Contact us to schedule a consultation with an advisor.