I Survived 3 Painful Company Acquisitions — I Don’t Regret My Choices

What you can learn about how small company acquisitions work.

I’ve had a long career with a plethora of experiences. I’ve traveled internationally, spoken in front of thousands of people, helped create technology solutions for many customers, and had a successful social media presence.

However, there is always bad with the good. There were many bumps in my decades of working, and it was a hard road at times. The first three technology companies I worked for were all acquired. This was a known risk, as I chose to work for smaller professional services firms (<150 employees). Being acquired is a path many of them take, especially when they’re run by a sole person.

I’ve learned a lot in these past couple of decades. And after thinking about what I’ve been through, I realize now that I don’t regret my choices.

Disclaimer: The following information is based on my personal experiences only. None of the acquired firms I worked for were startups, nor did they sell a product — they were all professional services firms. Your experience may differ greatly based on industry, company size, temperament of the leadership team, and other important elements.

Notes: what happened before and after the acquisition

When each acquisition was announced, it was a surprise to most employees. The leaders didn’t indicate they wanted to sell.

Side note: there are important, psychological reasons why leaders choose not to share this information in advance. When a company goes into a self-selling mode, it must look attractive to buyers. A company’s most important asset next to products and patents, if applicable, will be its people.

News of an acquisition equates to change.

Change scares people.

People equate to talent.

And talent fleeing a newly acquired company, although a common scenario, leaves them in a compromised state.

Sometimes before and sometimes right after the acquisition, the newly acquired companies went into cost savings mode. All three of them did this, although the timing was slightly different. Shared services — the departments that run common company operations like Human Resources, Marketing, Accounting, and Finance — consolidated and downsized after their acquisition. There were casualties.

In addition, right after the acquisition, there was an immediate and strong push for revenue. Sometimes an acquisition unsettles a known brand. So the company must send out a powerful message that the sum of the parts is now greater than the whole to avoid losing customers.

One of the acquisitions was backed by a private equity firm, which is a common scenario. Private equity firms and venture capitalists (also a natural backer of acquisitions) are full of smart people who get into the game to make money. Never lose sight of that if you find yourself in a similar acquired state. In this type of backed acquisition, the investors are looking to make that money back quickly. Expenses will get cut, more salespeople will be hired, the workforce is culled, and a slow and steady flame toward burnout ignites. This all happened in the first year after that company’s acquisition.

Notes: leadership after an acquisition

The acquired CEOs in each case got a big payout. In all cases, this payout occurred in stages — one upfront and one after they stayed on for a period of time. And those payouts weren’t necessarily shared with other leaders in the firm. There may have been other payouts. In one of the acquisitions, I heard a rumor that there were performance-based payouts for that CEO for each year he stayed on.

It was interesting to study my CEOs after the acquisition. I found them in a constant stressed state of balancing the organization they’d nurtured for years and the needs of their new masters. One CEO, in particular, oscillated between feeling like a visionary and feeling like a sellout. After a while, his false bravado over the potential growth of the acquisition tired his workforce and many key employees left.

From what I’ve seen in my industry, most CEOs will be contracted to stay on. In my experience, this minimum stay will usually be 1–3 years. Then they either willingly stay on, get forced out, or choose to leave. None of them survived more than 4 years. In two of the acquisition scenarios, the CEO was demoted and seemingly left due to wounded pride.

Leadership was not always in the form of a CEO. Some CEOs surround themselves with a team of folks that are their sounding board and these folks have other C-level roles at the company. This was the case in two of the acquisitions. What I found is that this team of folks either got forced out or didn’t always know what the truth was and did their best to keep the ship moving with a smile on their face.

Notes: workforce after an acquisition

What bothered me most was what happened to the employees. Sometimes the aforementioned workforce burnout is a slow creep that lasts for years. Sometimes it’s a quick death that implodes.

What I saw standing in the wake of these acquisitions was a bunch of hard-working employees whose allegiance became tested. Many couldn’t reconcile the change in priorities by their leader. They watched their previous, established company brand erode and then shift into something new. They watched their culture disappear. All of these things happened to every single company that I worked for that became acquired.

Many employees fool themselves into making arguments for why they should stay when they would rather leave. They tell themselves that the empty promises of equity may come true one day (they don’t in these small firms). And they’re holding onto a legacy that’s over and won’t be coming back.

What has happened every time in my experience, is a shell of a company stands before them within a few years. And they’re wondering how they got there and why they didn’t get out while the hiring market was hot.

My experiences

The first time I went through an acquisition, I was one of the doe-eyed employees who drank the Kool-aid and stayed on for a couple of years. When the management team in my local office changed and became toxic and cut-throat, I got the hell out. That company ended up dissolving completely within 4 years of its acquisition, with no skeleton left of any of the firms that were acquired.

The second time around, I saw the writing on the wall before it was too late and got out right before the acquisition happened. Within 3 years of their acquisition, there was no shred of their former self, and over 90% of the original employees left the new firm.

The third time around, I made a plan when the acquisition was announced and left before the 1st anniversary (and while the job market was still rich). That acquisition was unique. The original company is still around but has morphed into a completely new entity with a new name and a new brand. If the private equity firm does its job, the most likely scenario will be selling my old company off before the 5th anniversary of the acquisition.

Why I kept taking the risk

The reason why people like me work for small professional services firms is that we don’t want to be just another number in a vast sea of employees. We want to build something and make a name for ourselves. I’m a known brand in my industry and I could not have done that through a larger firm.

People like me go with a smaller firm because we want the company to feel like family. We want a smaller group of people making the decisions, even if that means an acquisition. That’s the silver lining and that’s been true of all the small firms I worked for. The risk of a sellout is always there.

What I learned along the way was to create an independent brand that I carried with me to every firm and then grew. When I left the third acquired company, this branding over decades allowed me to go into business for myself. I’m older and wiser and I see things with experienced eyes now. I know when to get out and how to play my cards.

In closing, it’s important to note that not all acquisitions end like the ones I’ve been through. If you’re going through an acquisition, there are a lot of variables in the mix that could yield a completely different outcome. Don’t be scared. Be smart. Do your research. Read case studies of companies who’ve been through what you’re going through. Know what part you want to play and where to draw the line.

Looking back, it’s been a long and interesting career. But I wouldn’t trade my lifetime of experiences and acquisitions for anything.

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