February 28, 2021 at 3:40 pm #117672
PMI is not an easy tasks. For small and young tech startups that are being acquired, what are the main issues to be considered for a successful postmerger integration?March 1, 2021 at 3:41 pm #117707
Michael Maggiotto JrParticipant
People, culture, and alignment with the original transaction thesis. Everything should be compared to that transaction thesis. Failure to align decisions with the transaction thesis will ultimately lead to a failed transaction. People are the most important asset for the business, especially for a small (headcount) startup in the tech space. If you fail to retain the right talent during the integration, or they leave within the first 1 – 3 years post-merger, then you loose the intellectual capability they possess and the creative driver that led to the merger in the first place. Some of that talent can be replaced, after all, we are all replaceable, but not all can be and definitely not the unique ideas that key players possess. In a small startup, that can be devastating whether a tech company or some other industry.March 7, 2021 at 2:26 pm #117893
Michael, I agree. I think what helps tremendously with the alignment is to have a short, concise statement as to why you to date acquisition. EVERYONE in the organization should know why. That, in my opinion, is the first step of alignment.March 14, 2021 at 11:00 am #118180
Culture differences are the most obvious with startup m&a. startups operate with little or no red tape, and limited politics in the workplaceMarch 18, 2021 at 9:55 am #118291
Edwin Ng, CFA, CAParticipant
Bigger MNCs may find the nimbleness of startups daunting. Smaller companies with fewer black-and-white policies and procedures may feel uncomfortable dealing with the bureaucracy present in these bigger companies.March 24, 2021 at 3:29 pm #118434
I would agree with some of the other comments that culture is a big one. Even a well established start-up merging into a larger company will likely suffer the consequences of cultural differences. The performance of employees can drop, the projects to meet synergies drag on and on and the leadership likely won’t fit in and if founders of the acquired company, they may feel they don’t need to adapt.March 25, 2021 at 6:36 am #118446
I would consider culture and leadership to be important issues for a successful post merger integration. Often, young startups would mean vibrant and spontaneous working culture with lesser bureaucracies, this would very much differ from larger companies that may not be the case. How they would remain relevant and competitive would mean depend on what makes it successful in the first place after integration.April 5, 2021 at 10:02 pm #118726
It is very empowering when start-ups get bought and the buyer allows the new employees to move up the career ladder. The target group employees know how to motivate and maintain the excellence that made them an asset worth buying.
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