Put Intention Back Into Acquisitions

As growing businesses seek to increase their capacity and narrow in on core business functions, the Business Process Outsourcing (BPO) industry continues to evolve. In 2023, the global BPO market was valued at USD 280.64 billion , and it is projected to grow at a Compound Annual Growth Rate (CAGR) of 9.4% from 2023 to 2030. This means more mergers and acquisitions, with some companies securing trajectory-shifting agreements, and even more navigating precarious missteps.?

I’ve managed my fair share of M&As, and the challenges and opportunities that come with them as the CEO of SupportNinja . Along the way, I’ve collected career-changing lessons, and I’ve established an authentic point of view on acquisitions.?

Here’s what I’m grateful to know now.?

It’s Possible to Make 1+1=3 in Acquisition

Before all the math whizzes roll your eyes, hear me out. In acquisitions, two companies are coming together to amplify their impact. When this is done well, you’re expanding your team and capabilities, you’re improving your systems and procedures , and you’re unlocking new markets. Ultimately, you’re able to discover an unparalleled synergy that would never be possible without one another. The kind of synergy that allowed Morgan Stanley to see a mountainous spike in share price since its acquisition of E*Trade in 2020.

My method aims to make 1+1=3 in acquisitions. Start by considering the collective value that the two companies could have in the future. Rather than just seeing the individual value of each other and why you’re acquiring, ask: What will you be able to do together???

Don’t try to force your potential acquisition into your model. Find a way to evolve collectively so everyone wins—clients, employees, investors, and your companies.

Choose Value Over Revenue

If you’re only thinking about the financial aspect of acquisitions, you’re leaving potential value on the table.

Many companies lean into acquisition strategies that primarily focus on optimization or cost-cutting. It’s time to rethink the tuck-in strategy. I use the term “strategy” loosely here because I’ve found that this approach often, not always, lacks a strategic vision. It involves a larger company tucking a smaller company into it, resulting in the smaller company losing its systems and structures. This approach is generally deployed to increase revenue, and while that’s a worthy business pursuit, it shouldn't be the sole reason behind your M&A. With any acquisition, there needs to be a firm stance around what value you’re trying to provide and gain as a combined entity.

And this can not be done without respecting, prioritizing, and valuing people—people on both sides and at every level of the deal. The difference between an acquisition going incredibly well or incredibly poorly comes back to the people and don’t fool yourself into believing otherwise.?

Pay Attention to Your People

As an acquirer, I always look for the best in people and culture within my new team members. In order to do so, I try to make sure I meet with someone new from my team each week. To some, this goal might seem too small–to others, it might seem too ambitious–but I find that it makes a true difference for all involved.?

An example: I once acquired an employee from another BPO company. When I met with him one-on-one, two things happened. One, I immediately saw his eagerness to truly learn about our people and processes. Two, he immediately saw our willingness to be transparent and supportive. This meeting allowed all parties to grow with intention, and the acquisition left him feeling confident and enthusiastic about his future at our company.

This interaction should not be the exception to this process. It should be the expectation.

Infuse Transparency and Agreement Into Your Messaging

According to Harvard Business Review , between 70-90% of acquisitions fail. The obvious issue of integration is one reason for this. A more insidious cause for failure or inability to acquire in the first place is messaging. Ryan Strategic Advisory shares a great article on this, in which he explains the importance of BPO companies presenting the benefits of M&A deals positively and aggressively. This is not only important for potential partners but also for existing ones.?

Two strategies can aid in crafting your messaging. The first is transparency. ?Remember, for lack of a better term, you’re buying someone’s baby. They did grueling work to build something from nothing. Transparency is vital to building trust in your ability to take care of the business and assets that took them time and effort to create. And trust is usually exhibited before it is felt. The second is the Zone of Possible Agreement (ZOPA). If you’ve ever gone to a car dealership, you’ve likely encountered this strategy. A car salesman may ask you what colors, models, or car types you prefer. They may inquire about your lifestyle. They are trying to establish what your ZOPA is. When you reply with questions about warranties and reasons for selling, you’re trying to figure out their ZOPA. As the two of you volley back and forth, you eventually hit a range that’s narrow enough to allow for mutual agreement.

This anecdote reminds us of the importance of being upfront about potential challenges you could face, rather than ignoring them. Acknowledging how something might be an issue can quell nerves and anxiety. It also provides greater opportunities to find solutions together, so that you have no issues explaining why your acquisition is a genuine benefit to all parties involved.?

Reduce Attrition

If you read this and went, “Well duh,”? I’m gonna write it again in italics, reduce attrition.?

This might feel self-explanatory, but some can lose sight of this necessity when managing the many legs of an acquisition. This should be your number one goal from a client, employee, and revenue perspective. When my company acquired Bolton Remote, we lost 1 person out of 900. This is no easy feat and it was only achieved by being intentional about understanding our strengths and weaknesses as we integrated.?

One way to go about this is to host town halls for the companies you absorb. Give your team an opportunity to honestly share what’s going great and what needs serious attention. Pay just as much attention to junior associates as you do to supervising managers. Each level of your organization will feel the weight and challenges of acquisition differently.?

Be intentional about understanding hiccups at all levels so you can create better solutions. Another lesson I’ve learned is to never rip the bandaid. It’s going to be a tough process, but go slow and allow your company time to find its new groove after an acquisition.?

When in Doubt, Follow The Three T’s

The last piece of advice I’ll leave for any business leaders considering an acquisition are my three T’s: transparency, trust, and timing.?

People can usually tell when someone isn’t giving them the full picture. Taking a transparent approach allows potential partners to make an informed decision and build trust with you as an acquirer. And trust can make or break your deal. As can timing. Don’t rush into an acquisition and don’t force other companies to feel like they have to either. Make decisions with the timing of your market, clients, and industry in mind. These qualities allow you to approach acquisitions from a place of intention and integrity, with value top of mind.?

The Path Forward

Acquisitions can be a powerful tool for growth and expansion, but they require a strategic, people-centric approach. By prioritizing synergy, value, transparency, and trust, you can navigate the complex landscape of M&As with intention and integrity. Remember to focus on the collective potential of the combined entity, pay attention to your people, craft effective messaging, and reduce attrition.

As you embark on your acquisition journey, keep the three T's—transparency, trust, and timing—at the forefront of your mind. Embrace the challenges and opportunities that come with this transformative process, and remain committed to creating a shared vision that benefits all stakeholders. With these principles as your guide, you'll be well-equipped to unlock the full potential of your acquisitions and drive sustainable growth for your business.

If you enjoyed this article and want to speak about navigating acquisitions, I'd love to hear from you. As someone who has managed numerous M&As, I'm happy to share my experience and insights on prioritizing value, reducing attrition, and crafting effective messaging throughout the process. Together, we can create a shared vision for acquisition that benefits all stakeholders and positions your business for long-term success.

Sources:

1. Industry Commentary BPOs Must be Mindful of M&A Messaging
2. Don’t Make This Common M&A Mistake
3. Bolton Remote is now part of SupportNinja