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Let's make a deal: Lessons learned from M&A amid adversity

The remarkable Steve Jobs once said, “Sometimes life is going to hit you in the head with a brick. Don’t lose faith.”

Little did he know the colossal “brick” that 2020 would be, impacting each and every one of us. However, Jobs is right in that the people who don’t lose faith come out on the other end. There may be some bumps and bruises, but this too shall pass.

Business leaders who have kept the faith and adapted to new ways of operating can share stories of success over the past year. One area of growth? Mergers and acquisitions.

According to data from Refinitiv, global M&A in 2020 grew to $3.6 trillion. While that number is down 5% from 2019, Nasdaq reported a V-shaped recovery in the second half of the year, marked by a spike in dealmaker confidence following the economic downturn in the first half.

With the help of my leadership team and unwavering support from my employees, ECI completed five M&A transactions in 2020 and, at the same time, closed our own sale to a new private equity firm.

While 2020 was a unique year in many ways, we learned several valuable lessons from the experience that I believe can help business leaders keep faith in the M&A process during 2021 even if life hits them in the head with a brick.

Create normalcy

When evaluating the deal, treat the process and your approach just like you would if you weren’t in a pandemic. Whether face-to-face or not, buyers still need to get comfortable with the same information they would in a typical process. Treat every meeting with the same intensity and purpose you would normally. 

COVID-19 has restricted the ability to meet face-to-face during M&A deals. Before, leaders would start off with an in-person management meeting, often getting to know one another over dinner. As the deal progressed, both parties would spend a considerable amount of time in person diving into all areas of the business to settle on a deal structure that both sides felt comfortable with -- and to ensure the companies were a cultural fit for each other. 

Now, I’ll be the first to admit that doing all of this over a video call seemed quite impossible. But experience has taught my leadership team and me that, not only is it possible to go through the same “face-to-face” interactions as we did before, such meetings are just as important as they were pre-COVID-19.

When it came to our private equity acquisition process, we realized that our potential acquirers simply wanted to understand how our business will perform, especially when there are macroeconomic headwinds. Being that we were literally in the midst of a global pandemic, we were living through a real-life case study that showed the resiliency of our business and the resiliency of our small and mid-sized customers. 

Not that anyone wants to be in an economic crisis for this reason, but it did change the dynamic around our response to those types of inquiries. 

Be open and transparent

As far as internal and external communications, it is even more critical to overcommunicate in all areas during a pandemic. When most of your employees and customers are working remotely, they often feel more disconnected than when they are in the office. Communication is critical to keeping everyone informed and comfortable with change -- a crucial leadership strategy no matter what else is happening. 

Success starts with your people. They are the heartbeat of the company, and when they feel informed and part of the process, then all the other critical KPIs will follow.

A few years ago, we surveyed our employees from businesses that we’d previously acquired. One interesting comment that came back was not to use phrases like “business as usual” in our initial post-acquisition communications. This was because, to the acquired company and its people, it is not business as usual. Their work lives have changed, along with their company, health insurance and benefits, perhaps their management structure, and so on. 

So, while we want to make our customers feel like it is business as usual for them, we have to acknowledge that for our employees that is not the case. I took that to heart, and we have really adjusted our approach in that manner.

As a business leader, you already know that there are bumps in the road when managing a business – especially when you throw an acquisition into the mix! However, it is important to remember that hard times, like 2020, can make or break a company.

Whether life is hitting you over the head with a brick or not, it is important to keep the faith, learn from the pitfalls and remain agile in order to make the deal and keep improving the business for your employees, customers and partners.

 

As CEO of ECI Software Solutions, Ron Books is the visionary responsible for strategic direction. Hired as the 32nd employee in 1999, Books has leveraged his background in sales and in-depth industry knowledge to develop the company into the global enterprise it is today.

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