Given my background, and technology orientation, I bet you thought I was going to be writing about EAI. Well I am not, I’ll be writing about of integration of a startup into a larger company after an acquisition. Since M&A is a standard exit for Israeli start-ups I though this would be of interest.

Fist of all – let me make it clear integration after an acquisition, even when handled perfectly, is hard (and it is never handled perfectly). Second, Israelis aren’t Americans (which I think is relevant since most Israeli companies are acquired by American companies). Third, distance does make a difference. Having gotten that off my chest let me start with some rules for the acquirer:

The trouble starts with the whole mechanism of the deal – everyone is focused on closing the deal – no one is thinking about what happens the day after. This leads me to rule 1 - make sure that someone is thinking about the day after. There should be one person from each side, but at least one senior person on the acquiring side. Give that person both responsibility and power. Make sure they have clout in your organization, know how to get things done – and have exceptional people skills. Actually people skills are the most important attribute.

Rule 2, 3, 4 – Communicate. Communicate. Communicate. You can never communicate enough. Israel is far away, and has a unique culture. Because of the distance you can’t have impromptu meetings in the hallway, lunchroom or at the coffee machine. You need to keep people informed, and if the Brits and American are two people divided by a common language – just imagine when there is no common language. Yes, most Israeli’s speak American – but they don’t always understand the nuances of american english – especially in a corporate environment. Constant communication is the only way to keep a misunderstanding from festering into a full-blown crisis.

Rule 5 – Pretend you are a doctor and have taken the Hippocratic oath – first do no harm. Don’t change anything until you have learned the landscape of the new company. I know successful US executives have a penchant for action – but this is a case where early action can be disastrous. Understand that it will probably take a year until the company is more or less integrated. Maybe I should have put this rule first.

Rule 6 – Get help. Try to find someone that has some experience in these types of mergers and get them to help. It will keep you from having to learn only from your own mistakes.

Rule 7 – visit early, visit often. Make sure that the new company gets to know you and your team. Make sure that you get to know them.

Rule 8 – remember that the company acquired is diffeent than your own, with their own unique culture. That is probably one of the reasons you acquired them – figure how to work within that culture without breaking things too badly.

Rules 9, 10 – Make sure you remember why you did the transaction. Sometimes in the grind of the day-to-day and with executives switching in and out of roles – the actual strategic reasons for the acquisition are lost. Make sure you keep that knowledge alive, and use it to help with the day-to-day decisions.

Stumble it!

This entry was posted on Saturday, June 2nd, 2007 at 5:41 am and is filed under Aquisition, Integration, M&A, VC, Venture Capital. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.