Ryan McGrath is the CEO and president of Asset Living, the fourth largest apartment manager in the United States.
Mergers and acquisitions can be one of the fastest ways for a company to expand its reach, attract new customers, and ultimately lead to success. While organic growth is important, it’s not the only way to scale a business. Many of the large, influential companies we’ve seen arise in recent decades have been built on at least one merger or acquisition.
That said, mergers and acquisitions come with their own unique challenges. For a deal to provide lasting synergy, both companies (but especially the acquirer) must stay on track. Here are four critical aspects leaders should keep in mind when navigating an acquisition.
It goes without saying that the potential acquisition must add something of value to be considered truly valuable, be it a new location, business services, or technology. This value must not only exist, but the acquirer must also be able to use it strategically.
So ask yourself: does the new location, business service, or technology align with your company’s strategic goals? The answer should be a resounding yes—perhaps not just for this year, but for years to come.
Do the inherent values of both organizations match? This is something I ask myself as we consider a potential acquisition. Much of my role as CEO is spent building and sustaining the company culture. Businesses, regardless of their industry, are driven by people and the inherent traits they regularly maintain.
Therefore, it is critical that the individuals who come together as a result of the business deal share congruent core values. Looking beyond corporate synergy and specifically to corporate culture will ultimately aid in the integration process, which can become difficult if you downplay the importance of cultural fit.
When an acquisition is underway, it is common for the respective leaders of both organizations to meet regularly before closing the deal. Use this time wisely. Try to determine if there is inherent harmony between both parties; mutual understanding and a collective drive for shared success are optimal. How senior leadership gets along serves as a primary indicator of how the teams below them will work together across the board.
Change and humility
Both organizations must not only accept change, but also embrace it. Mergers and acquisitions do not bode well for the rigid. In other words, growth at scale goes hand in hand with change and the inherent uncertainty that follows. Be sure to do your due diligence, but as a leader — and ultimately a decision maker — you’ll never have all the information you think you need.
Frankly, I’ve found that it also takes a healthy dose of humility – especially on behalf of the acquirer – for a deal to reach its true potential. If you walk into the acquisition process as a leader and think you have all the answers, chances are the deal won’t go as planned. Listening is often the first step to progress, especially in the boardroom.