Acquisition Business Steps

Congratulations! You’ve just closed a deal to purchase an existing business. But what do you do next? If you’re investing in a franchise, your freedom to make operational changes is pretty limited, but if you’re taking over an independent company, you likely have a lot of new ideas you want to implement. Regardless, you can’t just burn down the existing business model and rebuild it from scratch without losing the trust and respect of the staff — which you’ll need if you want to succeed. To make the management transition easier on you and any employees who may be staying on board after the acquisition, here are the next steps you should take after you buy a business.

 

1. Do an audit of the existing processes and practices.

While you were planning the acquisition, you probably became quite familiar with how your new company works. However, there will still be a learning curve, and you’ll spend your first few weeks getting to know the ins and outs of the business.

“Regardless of the entrepreneur’s background and the amount of due diligence conducted prior to an acquisition, the entrepreneur will never truly understand the business until he or she starts to operate it,” said Michael B. Shaw, chair of Much Shelist law firm’s business and finance group. “Every company is unique, and an entrepreneur needs to truly understand that business before deciding what changes to make.”

From a practical standpoint, one important consideration is the business’s security practices. Steve Manzuik, director of security research at Duo Security’s Duo Labs, advised business owners to do a thorough audit upon acquiring a company to identify and address any key gaps, especially if you’re buying a startup.

“A lot of startups are so focused on building their business that they postpone implementing a basic security program,” Manzuik said. “In addition, traditional security mechanisms can be complicated to operate and expensive to procure, leaving many startups and small businesses unable to afford them at the early stages. Any entrepreneur who is acquiring a business … needs to investigate what existing security controls are in place.”

Here are a few of the key security measures Manzuik said to look at:

  • What systems and/or cloud services are being used by the business (customer-facing and internal)?
  • How is access to these systems controlled (unique user accounts, password requirements, two-factor authentication, etc.)?
  • How are the systems managed? Are there documented standard processes for patching and configuring them?

If it’s within your budget, consider bringing in a third party to audit security processes, review systems and look for weaknesses in your new company’s systems, Manzuik said.

 

2. Communicate with the existing staff members.

Acquisitions don’t often bode well for the existing staff of the acquired company. It’s unlikely that the new owners will have the funds to keep everyone on board, especially if they plan to bring in more staff of their own. Mark Davis, CEO of Puro Clean, said one of the biggest challenges a new owner will face after an acquisition is fear throughout all levels of the organization.

“There is fear of the unknown, fear of change, fear of benefits being modified, fear of the direction of the company, etc.,” he told Business News Daily.
The solution? Be transparent with employees. Talk to them as soon as possible, and make sure they know that you’re interested in getting to know them and their company, Davis said.

“After every new acquisition I have made over the past 20 years, I have communicated directly with all employees and team members within 24 hours of the announcement,” he said. “I have found it helpful to communicate the announcement verbally … and in writing, along with an FAQ that is posted throughout the organization [and] emailed to every employee. It is impossible to overcommunicate the initial message and the FAQ.”