Last time, I outlined some basic overall strategies in order to identify some potential acquisition targets. This time I want to build on that and talk some about both short term and long term issues. For this, I want to use an example from my past.
As I have written in the past, AFC was looking to sell itself due to where it saw its market was going. In order to facilitate the sale, we needed to convert our customer base from 80% small carrier sales to 80% large carrier sales. One major step along the way was the purchase of the former Reltec Access Group in Dallas from Marconi.
Strategically the importance was that this team was the primary vendor to BellSouth. The company had other business but BellSouth dominated the revenue. AFC had not been able to crack into BellSouth and we saw this as a way of capturing the business. This is part of "buying a competitor" strategy. There was a challenge to convince BellSouth that they should stick with the platform, but that was something we were used to. In case it is not clear, the purchase would not be worth it.
Tactically we had to come up with an "Integration Plan". This is the plan of how to eliminate overlaps and make the two companies one. In the long term, we would like BellSouth to change platforms so that we could converge and concentrate our focus. Of course, that was not going to work in the short term. Our plan was to treat the group as essentially a wholly owned subsidiary. AFC appointed an executive (Jeff Rosen) to be the lead on the integration, but beyond that it was really only the G&A functions (HR, Accounting, etc.) that had to be combined. We kept Sales, Marketing, and Engineering separate. That way BellSouth would have the entire team that they were used to working with intact.
Did this work? Well, it is hard to say. AFC was purchased less than 1 year after this transaction closed (partly because of the transaction). In the meantime, BellSouth continued on with the product and we were expanding the people that were involved with BellSouth (including myself).
The point of this post is that the Strategy drove the Tactics. I need to speak more on both topics. Whenever you are looking at an acquisition, you need to have clarity and alignment between both the short term and the long term aspects of the deal.
Have a great deal!
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