Acquire what you know
When Livonius was conducting acquisitions at his old job in the ’90s, a long-time mentor offered the following
advice: “You need to feel equally comfortable going to dinner or being stuck in
an elevator with the management team.”
“It’s an appropriate saying because during the good times and bad times, you
really want to be comfortable working
with the management team that you’re
acquiring,” Livonius says.
The easiest way to ensure that level of
comfort is to seek a company with a culture similar to your own.
“It starts with, do you want to buy a
company that is similar in culture to
your company or not?” Livonius says. “If
you do, it’s a lot easier. If you’re culturally mismatched, if someone is highly
autocratic or authoritarian and you’re
more participative as a management
team and you’re more open, you’re more
communicative, it’s probably not a very
good idea to acquire the company.”
When asked what attracted him to
Resources On Call, Livonius points to
the cultural similarities above all else.
“There are 10 other companies out
there that we could have acquired
besides ROC, but in our mind, ROC had
the best match to our culture.”
He didn’t come to that understanding
over the course of two or three meetings. The process requires numerous visits by every one of your key executives.
“You’ve got to know them well enough
through several encounters to have that
feeling,” Livonius says. “Have members
of your team be present or have separate
meetings with management and then
compare notes. On my team, my CFO or
another VP of operations will all be
involved in assessing the culture by
interviewing different people. We don’t
always do it as a group; we sometimes
do it individually and see if we get the
same answers, and then come back and
compare notes.”
Bringing your direct reports into the
process will provide new insight that
you may have missed during your own
encounters. Livonius also suggests referencing outside parties for additional perspective.
“The way I think you understand the
company’s culture is also through references that you can rely on that are independent of the transaction, such as a former employee or colleagues in the industry,” he says.
In most cases, these interactions will
take place within your or the potential
acquisition’s workplace. Livonius says
that it shouldn’t be limited to these settings, though.
“Over the course of those meetings,
some are social,” he says. “You go to dinner; find out what the rest of their family is like and what the rest of their
lifestyle is like.”
Such interaction is a great way to gain
a deeper familiarity with another leadership team. He says there’s no substitute
for face-to-face interaction in a variety of
settings. If nothing else, it provides a
more intimate understanding than any
psychology test can provide.
“(Some companies) actually have psychological testers come in and actually do
some testing of the type of individual that
this person is,” he says. “I’ve really never
done that. I think it’s better to assess them
through the interviews that you do during
the due diligence process.”
And as you try to understand them, one
of the most important things to look for
is their understanding of their own company.
“The last thing when you interview a
culture is do the management and the
leadership … talk about their team in
enough detail that they really understand what’s going on all over the business,” Livonius says. “Do they talk about
them in a way that is positive about the
people that are below them?”
That promising company that Livonius
and his team eventually passed on
lacked this understanding. If you value
your employees and maintain an interest
in the day-to-day operations of your
company, you should only acquire a
management team with the same cultural
philosophy.
“Obviously, most people are going to say
great things about the people below
them,” Livonius says. “Can they describe
their team in detail? Can they talk about
somebody that’s two or three layers down
as an example? When you’re starting to
tell them about the business, ask questions like, ‘Well, tell me about an example
of a person in your organization that blah,
blah, blah, and it’s got to be three layers
down.’ If they can do that, then that tells
us a lot about the culture.”
HOW TO REACH: Nursefinders Inc., (800) 445-0459 or
www.nursefinders.com
