• February 8, 2016
• by:Serhat Pala

It usually starts as a rumor around the water cooler (or, more likely, the Keurig). Uneasy crowds gather ‘round and ask who is going to acquire the company and when, who has lucrative stock options and who will get the shaft.

And then it happens for real … the little company is thrust into the big unknown via takeover by a larger company, which relegates it to being just a business unit of the larger company.

So why do big companies acquire small ones? Usually there are three reasons:

Market: A small company has existing revenue/sales in a market that the big company wants to enter.

Technology: The small company has a technological product or innovation the larger company can use to build value on.

Talent (a.k.a acqui-hire): Small, innovative upstarts attract great brain power. Usually, creative, self confident talent strives in these small companies, so this becomes a major reason why big companies want to acquire small ones. Facebook, Twitter, Yahoo, Google, Apple, LinkedIn and Airbnb have all acquired smaller companies and immediately shut them down just so they could acquire the engineers behind them.

Encouraging “Intraprenuership”

If acquiring talent is the case, the big company acquiring the smaller one has to be extra careful not to alienate or scare away this talent. Usually, the best of the talent are the ones who would normally leave first after the small company is acquired.

Here are few tips for you to keep the atmosphere in the company ‘intra-prenuer” and ‘intra-ventor” enough for the acquired talent to stay and for the big company to benefit from it.

1. ‘Sell’ Your Company to the Newly Acquired One

Your big company might be buying the small company, but now it is time for the big company to ‘sell’ their ideas, future and hope to the newly acquired one. So, from day one there needs to be a narrative, and a key message and that narrative and message has to be repeated. Channel your inner politician and stick to this one message that you need to repeat. For example, if your key message is one of “hope and trust’, you should keep saying it at every opportunity and make it a big flag for the new management to keep waving.

2. Recruit the Influencers

Early on, find the influencers in the small company you are acquiring. They don’t have to be the best salespeople or the top innovators/programmers. The influencers you’re after are usually the ones that others make circles around at company parties. These influencers have a large network of friends in the company. A good tip to find them is to literally watch team members interact during office parties.

Once you find influencers (at least one from each key department), then recruit them. This is done best one-on-one. Tell them about how your big company is now planning on utilizing this new unit and how you trust them, how you are open and supportive. But, before you preach to these influencers (these people are usually socially astute so don’t think you can manipulate them), you have to be open, honest and a great listener and you have to be willing to listen to them. Being the social hubs they are, they are likely to know the general concerns that are cropping up among the employees of the smaller company.

3. Strive for an Initial Winning Project

There is nothing like momentum. So, once your new recruits are on board and trying to make this new business unit work and produce, it is critical that you find a good project that will produce results. Many people in small startups are drawn to them because of the creativity they can employ in their jobs there. They tend to be afraid of losing that ability to be creative in a larger company.  

So, don’t hesitate to spend time and resources to develop a great project to start the momentum by showing everyone that your big company is a good company to work for in terms of creativity. The success is very important and failure is very costly when it comes to this first project, so even though you want to be quick, you need to be confident, too. And it is also important that the success will be owned primarily by the the newly acquired business’ team. Don’t let the new big company people hijack the praise as a result of this success. That would just defeat the purpose.

4. Create the Process that is Right for the Company Culture

Each company is different and once your big company acquires that small one, the company culture will inevitably change. Study the culture of this smaller business, learn the dynamics and, if possible, after the first success (see above), come up with the right structure to foster more ‘intra-prenuership and intra-ventorship’. It has to fit, so don’t do this prematurely. Wait until you truly understand the culture, see what works, and recruit people from the old team to help you design this new process. The center of this process would be how we can recognize and reward the ones that produce with creativity and execution. On top of that, it should have a low level of bureaucracy to get it going and execute on things.

As a last word, I want to add this; respect the small company you are acquiring. Respect the people that work there. They might not have big company experience and might come across naive to you, but don’t judge. Try to understand and respect them. Listen well, and don’t think you can manipulate them. Your goal is not to trick them to foster ‘intra-prenuership’, your goal is to convince and empower them to keep creating and producing. Keep that in mind and you will be fine.

[Photo courtesy of Nguyen Hung Vu on Flickr]