Successful acquisitions require a deft combination of speed and patience on the front end. But the work isn't finished after the deal closes.
A trio of top Tampa area executives sat on a panel recently, in front of some 600 people, for a topic that confounds many executives — rapid change in big organizations.
The officials represent companies involved in merger or private equity deals totaling at least $3 billion over the past year. The deals include:
• Clearwater-based Tech Data's February acquisition of Avnet's Technology Solutions, a Phoenix-based technology distributor.
• Los Angeles-based Platinum Equity's acquisition of St. Petersburg direct marketing and printable coupon firm Valpak from Cox Media Group.
• Rockbridge Growth Equity's October sale of St. Petersburg-based Triad Retail Media.
Panelists included Valpak Direct Marketing COO and Chief Information Officer Chris Cate; Tech Data Senior Vice President Gerard Purcell; and Triad Retail Media Chief Information Officer John Kuemmel.
The panel was part of the Tampa Bay Technology Forum's PoweredUP Technology Festival, held in late May at the Mahaffey Theater in St. Petersburg. Speakers covered lessons learned from both sides of the table — buyer and seller. Panel highlights follow:
Here and now: “Being part of private equity was new for us,” Cate says. Platinum Energy approached Valpak to leverage the firm's technology and people, with an expectation, he says, to “create value” for the company.
It has been a shift in outlook for the company, says Cate. Under Cox Media Group, the company was focused on operations over the long haul. With private equity, “it's all about EBITDA and growth,” he says. The good thing is with private equity, the company will be able to get more investments toward projects they can prove will provide a return on investment and revenue growth.
Cate has gone to Kuemmel for advice on what it's like to work with private equity, something Triad Retail Media went through the first time a few years ago. With private equity, there's a fair amount of due diligence in getting to know the business and its business landscape. It's different than being acquired by a strategic competitor that's already familiar with the industry and players, Kuemmel says.
Talk, talk, talk: Maintaining culture can be one of the trickiest aspects of these kinds of deals. But the key is constant communication, the executives say.
For Tech Data, to tackle the uncertainty that comes along with an acquisition, the company made sure to communicate that the goal was to keep the talent. The company gave itself three weeks after the deal closed to combine teams, which set a quick focus on goals and integration road maps. “You cannot communicate enough,” Purcell says. “Over-communicate and be as transparent as possible in that process.”
Kuemmel, meanwhile, admits Triad Retail Media made a “misstep” in communicating its move, which made the firm part of a London-based global communications conglomerate. “We were waiting for certain answers; waiting for the parent company to tell us what to do,” he says. But executives realized they needed to start communicating with employees — even in the uncertainty.
“It's OK to stand in front of a group and say, 'I don't know,'” Purcell adds.
Cate says maintaining and growing culture is something executives at the acquired company need to be aware of, especially in a private equity deal. Private equity owners, he says, “don't care about culture, they care about creating value,” so it is up to leaders to be “corporate stewards of (culture) and not allow that to” happen.
Go all in: Having rock solid transition service agreements for data centers and technology is essential, says Cate. He says there was a significant amount of last minute investment in negotiating these details with Cox Target Media, Valpak's holding company.
And since Tech Data only bought a portion of Avnet, it ended up becoming an extremely complex deal, says Purcell. Not only did the company need to create new legal entity structures, but it also had to renegotiate enterprise software contracts and separate out the business from Avnet's data center. “When you close,” he says, “inherently you haven't bought everything.”