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Merger (or Acquisition) Recommendations?
pauly asks: "We are a small (5 man) specialized software company which is merging with a larger (200+ employee) company. Basically they are buying us to
add a whole new product line and have us be their development skunkworks. What recommendations would Slashdot readers have before, during, or shortly after the acquisition? This post is not a solicitation of legal advice: we have a very nice contract drawn up which is agreeable to both parties and which we will be signing shortly. We are looking for practical precautions or recommendations.
If you have gone through the same type of deal, what would you do the same, or differently?"
First of all double-check the contract with your lawyers. And I don't mean just reading the preamble. Concentrate especially on the parts and the exact phrasing about copyright holders. You need a good copyright law and contract lawyer. A good one may not be cheap but trust me, this is the most important single point of failure, so it pays off to hire an expert. Second of all make sure no one of your current people can be fired no matter what. From my experience this is the most common mistake made by small companies being bought by larger ones. They sign a great contract, everyone is great, until people start getting fired and being replaced by workers of the buying company. Be careful. Be very careful. Remember that they are bigger and you must take care about your own best interest. I wish you good luck. I really hope you will not end up like most of the small companies I have done business with.
Karma: Positive (probably because of superiour intellect)
The magic word is synergy. Being aquired can make sense for the smaller company, too. For example, they could increase customer acceptance by acting under the umbrella of a well known company. As far as I can tell, they already know that they will be aquired, that it makes sense from a business point of view and that the "merger" is acceptable to both parties contract-wise. He's looking for advice concerning clash of corporate culture, things to look out for when responsibilies change, etc. The quintet is going to do the job, they want to know if someone can give them a hint how to do it best.
The above AC has it right on the money. First, acquiring company is giving us access to a large base of installed clients interested in our application. Furthermore, to answer the parent, we (the quints) do receive a cut of the revenue we bring in from new installations of our software,as such we are not sacrificing all of our sales (and profit) to the mother company. Lastly, the scenario of being fired on day one is trumped since we all have employment contracts of various minimum durations.
Don't just study them. Join them. Make a point of meeting people in the company, learning about the other products, customers, etc. Be friendly with everyone--the first person you get to know may turn out to be a great ally or they may turn out to be the universally lothed office jerk--so don't "choose sides" until you've been there a while. In short, act like a new hire rather than a member of an organ transplant just waiting for the T-cells to show up.
-- MarkusQ