A look at M&A from leaders who have seen it all

Kristy Knichel

Kristy Knichel, president, CEO and owner of Knichel Logistics, knows firsthand the importance of understanding what a deal entails and then considering how the deal will impact personnel. Will it create more work that they may find difficult to manage? Will it impact morale?

After one acquisition, Knichel says two employees who had been with the acquired company for decades were given different roles. It ended up leading to significant frustration on all sides. Sometimes, it’s necessary to change; other times, it’s more productive to leave things as they are.

Arnie Burchianti

Arnie Burchianti, founder and CEO of Graham Healthcare Group, which started as Celtic Healthcare until a 2016 merger with Residential Healthcare, has successfully led the company through significant periods of growth, including a joint venture with Allegheny Health Network.

He once changed what was “sacred” in a business he acquired. As a result, he says avoiding that misstep has become part of his operating model.

Burchianti also follows a thorough due diligence process, sensitizes financial forecasts and models, and remembers that culture and employee engagement are key to success.

Townsend likes to encourage collaboration early. She rolls out integration projects with champions from each location/organization and ensures the integration teams receive monetary incentives and company-wide recognition for certain milestones.

While fair and equitable pay practices are important for a good culture, money isn’t everything, she says.

“Employee upward mobility is key, along with PTO, volunteer opportunities and feeling fulfilled in your role. This last one is the toughest to get right,” Townsend says.

Also, in a leveraged buyout, the investment firm needs to set expectations of the management team, pre-close, in terms of frequency of communication, board and budgeting requirements and annual management fees.

“I’m a fan of a lengthy sale process because you get to see how an investment firm behaves through the ups and downs of the process,” she says. “It will give you insight into their communication style going forward.”

When asked what makes a business deal one that leads to substantial profit, Herubin’s first words were: people, people and people.

His biggest M&A mistake came from not fully appreciating the personalities and motivating factors of the employees and key management that remained post-transaction.

“The ‘numbers’ or qualitative analysis looked great, but there was a delicate balance of personalities that the prior owner navigated and understood better than we did. Several key employees left, which negatively impacted the business until we were able to align our strategy with the existing team and culture,” Herubin says.