Keep the flag flying
Though that original outline will help set the table, you have to
follow up by being clear about your intention to run your new
acquisition as an autonomous segment.
“While we know best practices, we have better buying power
and we know HR issues, we absolutely must be respectful and give
him or her the right position to run the company,” Suriyakumar
says. “So our first objective is to make sure that we are joining that
company in that marketplace instead of that company joining us.”
The trick is the way you bring a new company into the fold.
American Reprographics doesn’t take over the new company in
name.
“We don’t buy the company and tell them, ‘Oh, by the way, this
owner has a new boss and, by the way, we’re going to change the
name and the color and we’re going to give new titles to all of
you,’” Suriyakumar says. “Because when you do that, you take
away a lot of the motivation, the enthusiasm, their pride and their
dignity. We work behind the scenes to develop and improve their
accounting structure, their cost structure and put more to the bottom line and the employee and the owner actually benefit by it while taking away all of the headaches.”
The first benefit to letting the company run under its old flag is
that it keeps the spirit of the owner focused on the business.
“If you think about any entrepreneur that’s built a company over
20, 30, 40 years, they sell the company, they get a chunk of money,
and typically, they would like to get on with their life, so to speak,”
Suriyakumar says. “But if you create an environment in which they
have their dignity and in which they can do all of the things they
did before, then they would stay. When you acquire a company,
they are often shackled with problems. … They have HR issues;
they have insurance problems. These are all headaches of a small
company owner. So there are a lot of things, which keep them
awake during the night, and when we acquire them we remove all
those shackles. We say, ‘You go and do what you did best for the
last 30 or 40 years, which is selling reprographics to your customers,’ and the owners love it.”
In addition to keeping that internal knowledge with the company, you can also hold onto the relationships those owners had with
local companies.
“We don’t change their names and put a big American
Reprographics stamp and make them one company,” Suriyakumar
says. “We … let them act as their own company because local relationships are very important.”
It can occasionally take an ego adjustment for the company
doing the acquiring to work behind the scenes while the existing
company is still the face of the organization, but Suriyakumar says
that one of the biggest mistakes you can make in growing through
acquisitions is assume that just because you’re bigger you know
the market better.
“It’s a typical thing for a large company, when they acquire a
small company, the first thing they do is to say, ‘We’re a big company, we acquired a small company, so you guys now have to sit
and listen to us, and we’re going to tell you how to run this company,’” he says. “If we go and buy even a $3 million company,
whether it’s in Idaho or North Carolina or Minnesota … we are
proud to be part of that company, and that company we bought
only because they know their business, so we become part of them
instead of them becoming part of us.”
