August 20, 2020
As part of the new section on Exits in the Second Edition of the book (order here), there’s a specific chapter around handling the post-sale transition and integration process.
No two transitions are exactly the same. If the buyer is a financial sponsor, you may have the same job the day after the deal closes that you had the day before, just with a new owner and new rules for you. Sometimes you’ll stay on with a strategic buyer as the head of a division, or the head of your product. Sometimes you leave on Day 1. Sometimes you leave later.
But the most important thing you can do is remember that once the deal is over, it’s over. That’s why an honest answer to the question, “Are you ready to let go?” that I posed in an early post is so important. You may or may not be the CEO, but now you definitely have a new boss, and in many cases, a boss for the first time in years. And you are no longer in charge.
“Even though the deal was called a merger,” I once heard Ted Leonsis tell the Moviefone founders a while after AOL acquired Moviefone, “please remember that you have been acquired.” Your job is to figure out how best to set your team and products up for success in the new environment, regardless of how long or short you plan to stay at the new company.
We tried to focus our transition at Return Path to Validity in a few ways:
- For employees, we spent most of our energy and our capital setting things up in the deal documents before closing, recognizing we’d have no control of things after the deal was signed. Things like how much severance people would get if they were let go, and for how long post-deal, how much their comp could change, whether they could be required to move – those are all things you can negotiate into a deal
- For ourselves as leaders and me as CEO, knowing most of us would leave almost immediately post-deal, I wanted to have as elegant an exit as possible after 20 years. Fortunately, I had a good partner in this dialog in Mark Briggs, the acquiring CEO. Mark and I worked out rules of engagement and expenses associated with “the baton pass,” as we called it, that let our execs have the opportunity to say a proper goodbye and thank you to our teams, with a series of in-person events and a final RP gift pack. This was a really important way we all got closure on this chapter in our lives
- For the new owners of the business, our objective was to be of service to them, knowing they’d want to run it differently. So, for example, every time our new owners from Validity asked me a question (“Should we do X or Y,” or “Should we keep person A or person B?”), my answer was never simple. It was always, “What’s your strategy with regard to Z?” and then my advice could be in context, as opposed to thinking about what I would do in the prior context.
There are more details on this in the new section on exits in Startup CEO: A Field Guide to Scaling Up Your Business.