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The Best Way to Integrate Company Cultures After an Acquisition

The Best Way to Integrate Company Cultures After an Acquisition

Organic growth is great, but many companies -- especially tech companies -- expand their capabilities and customer bases through acquisitions. Th

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Organic growth is great, but many companies — especially tech companies — expand their capabilities and customer bases through acquisitions.

The strategy behind that approach is obvious. Less straightforward is how to successfully integrate an acquisition — especially where people and company cultures are concerned.

That challenge is something Art Papas, the founder and CEO of Bullhorn, has definitely experienced. (Bullhorn provides cloud-based CRM solutions for relationship-driven businesses by automating data capture and customer insight technology.) Bullhorn’s recent acquisition of Erecruit is the tenth company brought into the Bullhorn fold over the last ten years.

I talked with Art about the strategy behind acquisitions, why the first sixty days are so important… and why you want great leaders to call most of the shots. 

Give me an example of the thinking behind an acquisition.

Erecruit is one. The founders came to me when they were starting the company and said, “We’re going to build software that will solve some of the more complex challenge your customers have regarding payroll, billing, compliance…”

I said, “Awesome. That sounds hard. Good luck.”

They said, “Look: You can buy us now, or you can buy us in a few years when it will be more expensive.” And man, do I regret not buying them then. (Laughs.) They did a great job… and it cost us a lot more money to acquire them once they proved they could do it.

It made sense because we spent the first 20 years building software for our customers, to solve their front office needs… and for the last few years we’ve been on a journey to build out solutions for the back office. Buying Erecruit made total sense because it dramatically accelerated our road map pretty: We could take their people and their expertise and drop it right in.

And it’s been exciting for our customers: The more functions are integrated, the easier their lives.

Speaking of customers, sometimes custoer needs can drive acquisitions.

Connexys, a company founded in the Netherlands, is a perfect example. Their applicant tracking system was built on the Salesforce platform.

We used to go to customers and say, “You don’t want to be on Salesforce, you want to be on Bullhorn.”

That approach worked well, but unsurprisingly some people said, “Don’t tell me what I want.” (Laughs.) And those customers would choose them over us.

Sometimes it’s easy to forget you need to service customers the way they want to be serviced. 

Say I buy a company. What’s advice would you give me? 

For starters, make sure they become part of the company.

A lot of companies acquire another business and and then leave it alone. The thinking goes, “You built a great company… so we’ll leave you alone.”  That strategy can work for some types of businesses, but not for ours.

Customers expect a certain level of service and product quality from Bullhorn; if we don’t, for example, integrate customer service teams, then you might visit a customer who says, “I love working with you on this sie of the business…  but on the other side, it’s very different.” Early on we realized that in order to preserve the customer experience, we needed to integrate acquisitions.

And to integrate everything else: Sales, account management, product development… everything.

And then there’s this: If you decide to leave them alone, why did you buy them?

Integrating from an operational point of view seems more straightforward than in terms of culture.

Once you say, “We’re not leaving you alone,” you have to be explicit about culture.

Here’s what I say: You built a great culture. You were very successful. You had a lot of fun. Now it’s time to celebrate that culture… and say good-bye to it. You just joined a company with its own distinct culture.”

If you left Erecruit and went to work at a new company, you wouldn’t constantly say, “We did it this way at Erecruit.” You would embrace and try to fit into the new culture.

So we share our core values. Our core values are a set of behavioral expectations.  Like ownership and accountability: If you make a promise, put a deadline on it. Or the way we define good service: Leaving people feeling that you care deeply.

We describe how we will judge your behavior, and you can embrace that or reject it… but by rejecting it, you’re saying you’re resigning.

It took me a while to get to that point. Early on I thought we could merge cultures. But that doesn’t work. If a company with 200 employees gets acquired by a company like Bullhorn with over 1,000 employees, they’re outnumbered. The Bullhorn culture will prevail.

We will definitely look at things you do well. We’ll adopt some of those things. But we won’t change our culture to accommodate an acquired company.

How do people respond when you say that?

Initially many will say, “I don’t know if I like that.”

But the faster you get to the part where you say, “This is how the future will be,” the faster they’ll embrace it. So get that out of the way early on.  

That way you’ll quickly find out the people who don’t feel your culture is right for them. 

That doesn’t happen very often, though: While it’s a bit jarring at first, people are smart. And adaptable. 

HoI can understand why that would be hard for some people. They built something special; giving that up isn’t always easy.​

That’s why it’s important to celebrate what you’ve done. And then not grieve over it. It’s not like the company died. (Laughs.) 

People enjoy learning. People enjoy challenges. And people quickly realize that being acquired can create professional and developmental opportunities they may not have had. 

What about the owner(s)? 

We say the the same thing to owners. We wouldn’t buy them if we didn’t believe in the value of what they do, the value they provide to customers…

Then I say something I got from a private equity sponsor. He said to me,
I want to buy the company and I want a CEO… but I don’t know if I have a CEO if I buy you. I’m not sure you’re committed and excited about working with us.”

He was right. I wasn’t sure what life with that firm would be like.

I need a committed CEO. I can buy the company with or without the owner, so the owner needs to be all-in. 

What’s great is we’ve had a number of successful executives transition in and be extremely successful. Our current head of engineering and research and development came from our first acquisition seven years ago. The head of product for Salesforce products came from an acquisition. Many join, become part of the culture, and grow into bigger jobs.

It’s funny because when I started Bullhorn I didn’t even know the word culture. But it was always something I cared about.

How do you determine if the owner of an acquisition is embracing their new role?

The primary question is, “Do I want to lead through this person?” 

During the diligence phase we get to know the leaders. We have a sense for whether it will work. But you don’t always know.

The first sixty days is when we test whether or not we can work through the leaders we’ve acquired. That’s long enough; if someone tells you they need more than sixty days to assimilate, that’s a good sign it’s not going to work. Within the first sixty days you either get a great connection and it starts to click… or you’re starting to struggle.

At that point, sometimes things will improve. But usually they get worse. 

You went through that as well.

When we were acquired in 2012, I instead of investors who would opine but couldn’t tell me what to do, I now had an owner.

I had to wrestle with that: “Do I want to be a part of something like that, or do I want to 100 percent call the shots?”

I realized a good owner wants a great leader to call the shots — but to operate in a way that is transparent to the owner and aligned with their vision.

That’s what we expect from our leaders. We don’t tell them what we want them to do… but we do have a vision for the ideal outcome.

And they have to be great leaders to be able to execute that vision.

Let’s talk briefly about growth. Bullhorn now has approximately 1,100 employees. What have those transitions been like?
For starters, it’s always hard to go from stage to stage. From tiny to twenty employees is a transition. From twenty to fifty is another. From fifty to 150… to 500… to 1,000… they’re all challenging.

Now we’re a global organization with a lot more complexity… which means I lead through leaders, and many of them do as well.

One of the biggest changes is accepting the need to be patient. Our head of sales noticed I had thrown out three ideas during an offsite and someone invariably said, “No, we can’t do that right now…” 

He told me he felt bad I had all these things I wanted to do and couldn’t just “make them happen” any more. But we shouldn’t just “make them happen”: None of the things I suggested were a primary focus or priority.

In short, at some point you have to let go of the “swashbuckling CEO” thing. Granted, you’ll hear that Elon Musk will say, “Drop everything and do this.”  But that’s super disruptive.

So you have to pick your spots: Is this important enough to derail what people are doing? Is my every whim brilliant? Unlikely. (Laughs.)

You can be a genius… but not every idea is a genius idea. And I don’t fancy myself a genius. (Laughs.)

For the founding CEO, the role evolves: You have to become a professional CEO and lead in a measured way. You’re like the captain of a cruise ship.

Decide where you’re going, plot a course…  and if you decide to change course, do it miles in advance. 

This article is from Inc.com

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