When George S. Dadas
was looking to expand
Insurance Partners Agency Inc.’s footprint across
Northeast Ohio, he identified a
number of promising potential
acquisitions.
But when it came time to pull
the trigger, the president’s decision was ultimately based on
culture. “The key to merging
two distinct cultures is to first
understand the culture of the
acquired company,” Dadas says.
“I would not go forward with a
company that had vastly different cultural differences. You
cannot put a round peg into a
square hole.”
In the precarious realm of
mergers and acquisitions, a
clash of cultures can turn any
deal into a dud. To avoid such
calamity, Dadas says it’s important to spend as much time evaluating the value structure and
internal relationships of a potential acquisition as you do studying its strategic plan and 10-K.
To develop this understanding
of culture before acquiring
Lorain-based Humphrey &
Cavagna Insurance Inc. earlier
this year, Dadas spent as much
time as possible with the company’s management team.
“Spend a lot of time with their
key people,” he says. “You talk
to them about every aspect of
their business. You talk to them
about employee issues, about
customer issues, about how
they present themselves in the
marketplace. You get to know
their whole history.”
Dadas also suggests reviewing
the company’s brochures, promotional materials and especially its customer list.
“You know there’s that saying
that birds of a feather flock
together,” he says. “You can tell by the makeup of their customers whether there may be a
fit or not.”
Once you’ve done your due
diligence and signed off on the
deal, that doesn’t mean it’s time
to forget about culture. On the
contrary, managing a successful
cultural transition is often the
most challenging aspect of any
acquisition.
Dadas says one of the best
ways to promote a smooth transition is to share your company’s culture with the acquired
company with as much passion
as you spent gauging theirs.
“We try to set regular times that
I and people from my management team will actually spend a
day or two a week in the acquired
company … just so we get to
know them and they get to know
us,” he says. “We share our stories and our history. We share
with them our slogans. We share
the mission statement with them.
We want them to understand
the whole company culture.”
In addition to taking some of
his 54 employees to them,
Dadas also brought the acquired
employees to his own offices.
“We’ll have lunch and bring
those folks into the office so
they can meet their other coworkers from other offices and
get to know everybody,” he says.
The company has also implemented a partner program to
strengthen those relationships
even further.
“When you take over a company, you’re instilling your computers, your automation, your
systems and your procedures; it
can be overwhelming,” Dadas
says. “But if you partner people
up one on one, they develop a
good friendship, and they don’t
have to feel like they have to go
to a management person and
look like an idiot because
they’re not getting it.”
If you practice due diligence
on the front end and follow
through with as much effort
during the transition, you greatly increase your chances for a
successful acquisition.
“If you’re doing the right due
diligence prior to an acquisition,
you’re usually going to be better
off because the things that attracted you to them bleed into your
company — those new ideas,
the new methodologies, the
enthusiasm of the people that
are looking for great opportunities,” Dadas says. “Those things
are all very powerful.”
Reaching the resisters
In his quest to expand
Insurance Partners Agency
Inc.’s reach across Northeast
Ohio, George S. Dadas has over-seen a number of acquisitions.
The company president’s
insistence on due diligence during the targeting phase and that
attentive follow-up takes place
after the acquisition usually
result in a smooth transition.
Still, there have been a few
resistant employees along the
way.
“Yes, it happens,” he says.
“It’s inevitable.”
To mitigate the negative effect
of these resisters, Dadas offers
the following suggestions.
- Confront the problem. “What we do is meet with that
person and talk to them about
our observations. We know
they’re struggling, maybe we
see that they’re struggling, or
maybe they don’t have the best
attitude. We’ll let them know
these things, and we’ll let them
know what we really need and
expect from them.” - Give them time. “If they are really working at it, and you can
see that they’re making
progress, then I’ll keep the
string out a long time.” - Don’t be afraid to pull the plug. “People need to know that
somebody that is not going to
cooperate, is not going to fit in
and is being destructive to themselves and maybe to others, isn’t
going to survive. If they’re interfering with the process and
interfering with other people’s
progress, then I’ll deal with it
pretty quickly.”
HOW TO REACH: Insurance Partners Agency Inc., (800) 229-5266 or www.inspartners.com
