14 Oct Employee Involvement: Who and When during a Buy Process
Identifying the right people to participate in the process can be harder than it seems. The process needs to be part of a larger strategy the business was executing against and as such the target, process and anticipated outcomes should be widely known and understood by those at the executive level. That said, once the company is in an active process pulling in the right people at the right time can become problematic. The due diligence process can be lengthy and should always be split into functional areas with the assigned owners. The likelihood of a company wanting to tackle all functional areas at once is slim and not advised.
So who needs to be involved?
CFO/Finance: The financial elements are often the most important and should be led by the executive with the most insight into the existing business and the corresponding leader on the sell side. These two not only have to reconcile and debate the accounting and forecasts but they may also end up working together post combination.
Corp Dev: The head of corporate development at a corporation is largely involved in managing the inbound inquiries for ongoing processes looking for suitors, but the role is much more than that. We think of corp dev as the strategist, executionist and cheerleader for the “buy” option, out of the commonly considered; build, buy or partner scenarios corporations consider when filling a gap in their offering. Once in a process this individual is the continuity between the information, gaps and misunderstandings that arise in each of the functional areas during the process.
CEO: The CEO’s job during a process is to get the deal done. They often are working with the support system of the process and ensuring that timelines are being met and that the strategic value is agreed upon by all leaders. The importance of group alignment post combination is the difference between achieving a return on the investment or not.
Corporate counsel: Whether internal or external, the attorneys are a key contributor to the process. Not just documenting the combination but in the disclosure, reps and warranties as well as corp entity restructuring as well as regulatory filings and governance. All components required to complete a transaction.
Sales Leadership: Do not bring them in right away. Maintain a sense of confidentiality as we recommend sales people that are out talking to clients shouldn’t be brought into an acquisition early.
Marketing Team: The marketing team is critical with announcing the deal, involvement in rebranding, press releases, post merger integration (PMI) etc. Plan early with your marketing team!
Human Resources: Your HR leadership needs to be involved more in an asset transaction than a stock transaction as you shouldn’t need to repaper the employees in a stock transaction. Bring in leadership on a need to know basis.
The fact is, the more people you tell, the more risk that you could violate your non-disclosure. The rule should always be; “a need to know basis”. This is less about keeping confidential items confidential (which can carry more significance in public companies) and more about keeping people focused on the business. Acquisitions are distracting and if your leadership is all focused on someone else’s business, they are not focused on yours.
Leveraging an advisor such as Revenue Rocket will provide your executive team the guidance and support you need while helping keep your leadership focused on the business. Our team of experts has participated in hundreds of transactions and we can be heavy when it comes to driving the process to the best possible outcome.