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As tech company leaders, we work towards the day when the value of what we have created becomes tangible. One of the best outcomes is when a market leader makes a strategic acquisition of your company that is good for you, your employees, and your investors. In a perfect world, the deal lets you keep your team and your brand intact, and you can continue to build your business with the resources of a technology giant supporting your efforts.
Last October, I had the pleasure of leading my company, Spanning, through such an acquisition by EMC Corp. As challenging as the acquisition process was, it was only after the celebration was complete that I realized the hard work wasn’t over, it just changes. You have to integrate your small team into a much larger entity while maintaining the magic that got you here in the first place – all while delivering on the promised value the acquiring company expects from you.
In the nine months since the acquisition, I learned seven key things that might be useful for startup founders and CEOs who find themselves in a similar situation:
1. Know where you’re going before you close. One of the most important steps you can take to ensure a successful acquisition is to truly understand why you’re being acquired and how the success of the transaction will be measured. This knowledge will guide your priorities during the integration process. Are you being bought for your revenue stream? Then you better have a laser focus on making your sales numbers. Is this an innovation buy? Then make sure you keep your development team happy in order to avoid attrition post close, as their talent will be critical to your ongoing success.
2. Remember who you are. In most cases, your culture and people led to your acquisition in the first place. Try to instill those values into the acquiring company so you infuse your company personality into the combined entity.
EMC has allowed Spanning to manage our own environment, including our choice of systems and applications on which we run our business. In fact, EMC’s facilities and IT teams are using what we do as an example for other groups within the company. We’re also able to maintain the culture that attracts the type of talent we need in the Austin area – an open work environment, with perks like dogs in the office, bikes, food, events, and more.
Remember what the acquiring company bought you for so you don’t let go of what made you successful in the first place. Staying true to the human aspect of your work environment and bringing that along with you is crucial to your success when moving into a larger company.
3. Keep running your business. Don’t get sucked into big-company politics and become too inwardly focused. Stay focused on the relationships you’ve built with customers, partners, analysts, journalists, and prospects. Be open with them about what’s changing and what’s staying the same, and demonstrate to them you are still in it for the long haul. It is impossible to spend too much time with your customers — let them be your guide.
4. Understand the difference between leverage and “help.” Being acquired by a larger company will give you lots of opportunities for leverage. As a leader, it’s your job to find these leverage points and guide your team to take full advantage of them. EMC people have been open and collaborative with the Spanning team, and we are fortunate to be able to leverage them as needed and vice versa. However, you should be smart about where you engage and where you don’t. You will have a lot of new “friends” who will call and offer “help.” Most of these offers will only result in interference and unproductive work. Protect your team from the distractions, enable them to say “no,” and have their back when they do.
5. Realize that, as CEO, your job will change the most. Being acquired means you will likely no longer have to worry about raising capital, managing cash flow, and making payroll. This is great, but those tasks were also a significant part of your pre-acquisition responsibilities. You’ll also discover that decisions you previously made unilaterally now require multiple approvals. All of this can be unsettling to a CEO. In your new role, make sure that you focus on the key success criteria for the acquisition. If it was about revenue, throw yourself into the sales integration process and make sure everything goes smoothly. If it was about products or technology, help your product team with broader integration. Keeping this focus is not only gratifying, but it will fill the sudden gap left in your workday.
6. Expect to sell and market internally as much as externally. If you’re acquired by a much larger company, treat its employees as an external channel with which you need to raise awareness. They need to hear from you about the relevance of the company it just acquired so they embrace you and tell your story. They won’t do it without awareness or understanding of the bigger picture. We’re starting to see the momentum from our extended team’s awareness and excitement for our products and how we can help EMC customers protect cloud application data. That’s a direct result of clearly communicating what we do to the EMC teams via the information channels they are already familiar with.
7. Stay involved in recruiting. HR and recruiting is an area where you can gain leverage from the new company, but that does not mean your team should disengage from the process. If you rely completely on the recruiting process of the acquiring company, there’s a strong chance they will attract a different kind of candidate than you really want.
We had some challenges meshing the way we evaluate talent with the EMC recruiting process. A core part of our process is a homework assignment for all candidates that we use to determine how a candidate thinks and approaches problems. Without proper controls, our homework could be considered a “test” that might be the basis of a discrimination suit, and this concerned the EMC legal and HR teams.
Initially a point of friction, we learned to better explain why we assign homework to candidates as a way to document candidate assessment and compare them on concrete deliverables rather than subjective criteria. We also learned that we need to work within longer timelines. We now allot more time to the hiring process and give our prime candidates proper expectations for a start date.
As a whole, my team at Spanning has been fortunate to receive a tremendous amount of support from EMC. But we know that a happy union relies most on what we do to keep the innovation, spirit, and culture of our company alive.
Jeff Erramouspe is CEO of EMC-owned Spanning. He was previously president of Manticore Technology, the founding CEO of Deepfile Corporation (became StoredIQ and sold to IBM in 2012), VP of Market Development at Digby, and Vignette Corporation’s first VP of Marketing. He started his career with NCR Corporation and also held senior management positions at Compaq Computer Corporation.
