Steve Swinney is CEO of Kodiak Building Partners, a leader in the building materials industry that manages locally led companies.
Getting a deal across the finish line, regardless of whether you’re on the buy or sell side, can be a difficult task. Ask any experienced business leader and they’ll likely tell you successful acquisitions are equal parts art and science. It’s not just about generating value or driving growth; acquisitions also require strong relationships, adaptability, sound decision-making and, at times, trusting your instincts.
Throughout the course of my career, I’ve been involved in hundreds of deals from both sides and, with almost every one, I’ve walked away with at least one lesson that informs the success of the next deal.
Here are the five lessons that stand out. Consider these as you explore ways to grow and create your own successes.
1. Invest in great people and support them.
I’ve always believed in the idea that people and relationships drive success in business. Organizations don’t thrive on their own; they need leaders, visionaries and engaged teams to create lasting value. Before focusing on financials, assess the people behind the business. Who are the leaders and what do they envision when they think of success? What values and characteristics define the organization’s culture? It’s common for business leaders to zero in on the financial aspects of a deal to assess fit and potential for success, but in my experience, cultural and leadership alignment matter just as much—if not more.
The most successful deals tend to bring together companies that have similar visions, values, culture, communication styles and track records of success. Including these indicators in your assessment of a deal can improve your odds of success and help manage seamless integration and value retention so you’ll see a quicker return.
Beyond selecting the right people, it’s important to establish core frameworks that can provide structure for them, especially during the acquisition phase as you integrate teams and operations. Outline the leadership characteristics, cultural priorities and decision-making processes that will guide your employees. This helps to create supportive, agile and high-performing teams.
2. Pursue deals with organic cultural alignment.
While financial and operational goals are critical in dealmaking, you also need to consider cultural fit. The connection between value generation and corporate culture can feel intangible, leading many executives to overlook culture in M&A, but I believe it is the bedrock for a deal’s long-term success. Culture isn’t just a secondary consideration. It shapes how organizations operate, make decisions and sustain growth.
Lack of alignment on cultural elements—like corporate values, vision for the future, the attitudes and behaviors that drive outcomes—can derail even the most promising acquisition. Skilled negotiators can close gaps when it comes to financing a deal or working out deal structure, but like our own DNA, you simply cannot change some aspects of corporate culture. That’s why identifying fundamental cultural connections from the outset isn’t just advisable, it’s essential.
3. Never underestimate the value of research.
In the world of M&A, there’s no substitute for research. Whether assessing a deal, entering a new market or integrating a business, the right research and insights can have a transformative impact on success. This includes:
• Researching and examining both market and industry trends from current and historic perspectives to understand potential risks and opportunities.
• Investing in data and analytics that can build stronger forecasts so you can predict shifts in the market.
• Comparing business models, weighing the pros and cons of each for your specific enterprise to determine the best fit.
• Proactively preparing for new acquisitions and staying informed about data and research so you can react quickly when opportunities present themselves.
As you engage in deal activity, you can benefit from being a student of the game. Each acquisition presents an opportunity to learn. Make sure you take the time to reflect after a deal: What worked? What didn’t? What trends emerge from high-performing acquisitions compared to average or underperforming ones? This type of review is a fruitful exercise to uncover useful insights and identify future challenges and opportunities for the next deal.
4. Embrace uncertainty and adapt.
Growth through acquisition can be a very fickle line of work. Managing uncertainty and maintaining operational health in an ever-changing environment are part of the job. I’ve found that being adaptable is one of the most important skills business leaders need to bring to the table to create long-term success.
Humans are not conditioned to respond to change and uncertainty with optimism, but in business, we must shift our mindset and embrace the unknown with curiosity and confidence. When you focus on what you can control and how you can adapt, you’ll be able to seize opportunities with less stress, even when things are murky. To navigate uncertainty effectively:
• Anticipate a range of possible outcomes so you’re not caught off guard.
• Develop strategies that are easy to adapt and apply to various situations.
• Use real-time data and a flexible approach to respond accordingly to evolving situations.
5. Create value through operational synergies.
Acquisitions should create more than just financial gains—they should drive operational efficiencies to the benefit of both buyers and sellers. It’s a smart business move to look for ways you can improve operations, share best practices and increase efficiency across both companies. The integration can be complex, but meeting those challenges head-on with a strong post-integration plan focused on both operations and cultural integration ensures that you’re not just acquiring a company, you’re maximizing its potential.
The Bottom Line
Successful acquisitions aren’t just about closing deals; they’re about building sustainable, high-value businesses. By prioritizing people, leveraging research, embracing uncertainty and driving operational efficiencies, business leaders can position themselves for long-term success.
Each deal offers a new opportunity to learn and refine your approach. The key is to stay adaptable, focus on what truly matters and ensure that every move you make contributes to a stronger, more resilient company.
Forbes Business Council is the foremost growth and networking organization for business owners and leaders. Do I qualify?
Read the full article here
