When IT solution provider mergers and acquisitions go down, most business owners undergoing a buyout have thought through the valuation details, they’ve planned for how their customers will continue to be satisfied under a new regime and they’ve made sure their employees will be taken care of. But often they forget to plan for one vital detail: how will they personally weather the transition?
There’s a reason why most small business owners are usually contractually obligated to stay on after an acquisition: they typically bring a lot to the table after having built up their company.
"In terms of skills I think anybody who’s been in the position of CEO for years has a big-picture view of how business works, and I think that brings value to the new organization, who ever picks you up," says Doug Ford, director of central services management for All Covered, which acquired his firm The I.T. Pros in 2010.
At the same time, there may well still exist some sort of career skills or mindset gap in their experience that turns up once the corporate marriage is consummated. Owners with an exit strategy in mind can start cultivating those skills and attitudes ahead of time to ease a future transition, says Charles Weaver, president at the MSPAlliance and managing director of Weaver & Associates, which focuses on facilitating M&A deals in the managed service world.
"Generally a good business owner can develop those traits organically just within their own company," Weaver says.
For example, a more autocratic leadership style could start to be softened by working to establish some framework to accept more employee input, feedback and decision-making within the organization.
"Getting ideas from their employees and being able to look at new employee thoughts and feedback is a place to start," he says.
Weaver also believes that owners could stand to seek out more peer review from others within the industry.
"Peer review is a very good, humbling experience," he says. "And I’m not saying just talking once or twice at a trade show. They should have an active, ongoing dialogue with people in their community. It can be an easy way to start learning that trait of openness to others’ ideas."
For those owners curious about testing their tolerance of accountability to others, Weaver suggests seeking out an audit from an accrediting organization or standards body.
"If they go through a managed services accreditation or one of several types of IT standards body audits out there, it is a very effective way of subjecting yourself to accountability," he says. "With an audit you can’t just be doing things whichever way you want, and you have to be transparent. Those are traits that lend themselves toward generally working better with others."
As owners begin to transition into their new role, it is also important that they learn how to moderate their competitive nature to play better with a team, says Dr. Mark Sharpe, principal at CEO Executive Coaching and Consulting. A trained psychologist and leadership trainer, Sharpe has helped coach numerous executives through post-acquisition adjustments. He says that often the same nature that helped them build a successful firm for the ground up can also cause tension when they’re placed under several layers of management.
"By nature, the people who have risen to that level are people who are very competitive. The executive who doesn’t realize this tends to have a style of interacting with others that has them trying to one-up everybody," he says. "The little interactions they have can add up. They need to be aware of their competitive nature and downplay it."
However, there’s a delicate balance there, especially dealing with bosses.
"You need to know when to give and when to take to deal with the layer or layers above you; it is a people skill of knowing when to assert yourself, and when to be subservient," Sharpe says. "That’s one of the main challenges these people face in this transition because everybody hates a suck up, so if you over do it on that end of the spectrum then your boss loses respect for you. But if you’re overly assertive, they’re just going to move on to somebody else."
One final consideration that entrepreneurs-turned-middle managers need to think about is how much more stability will be likely required from their leadership style.
"The risk-taking entrepreneurial spirit is absolutely vital to companies starting out," Weaver says. "But at a certain point where it reaches critical mass and after an acquisition, then you have to be much more calculated and backed up with more data to make decisions."
According to Bill Crowsey, vice president of branch operations for the Dallas branch of the national firm ClearPointe, this is where a solid foundation in business finance and operations can be very beneficial. He notes that can be a challenge in the technology field where many people run a business due to their technical expertise.
"I had enough accounting background and enough management experience that I felt pretty comfortable moving into the role at ClearPointe," says Crowsey, whose firm was bought out by ClearPointe in 2009. "But I know other MSPs whose owners are more engineering and technically savvy and rely on other people for accounting and operations. They may want to consider really sharpening up on budgets and how to meet the bottom line."
Another suggestion, however, could be to simply ask for a more technical position within the new company. That’s exactly what Ford did.
"I know there are different types of CEOs, but I’m a technician-turned-CEO. I’m an engineer by trade and that’s what I love to do. I love to get my hands dirty," he says.
"So (All Covered) decided the best place for me to fit in the organization was in the central services group. Our mission is to plan, design and implement all of the managed IT services we provide both to our internal and our external clients."