Park Place Technologies’ Chris Adams
What you need to know before creating your own dedicated M&A team
Chris Adams took a calculated risk when he created an M&A SWAT team for Park Place Technologies. When the company completed six acquisitions in a 12-month span, Adams knew he had made the right move.
Creating a stand-alone unit enabled him to segregate duties with one group focused exclusively on completing transactions and the balance of his staff managing the day-to-day responsibilities of the business. It sounds simple enough, but there are a number of variables that need to be considered to make this strategy work.
“From a career experience, people view it as very favorable to their resume,” says Adams, president and COO at Park Place. “There is some upside to that, but I think you still have to think about pulling talented people out of their day-to-day jobs.”
After reading our Issue 5 Deal of the Week story on Park Place, readers wanted to learn more. So we asked Adams to share the details of creating an M&A team and how it has helped drive the company’s push to continue growing.
The value of an M&A team
One of the biggest challenges of an acquisition is the integration process. It puts a lot of stress on the existing employees to do their day jobs and to also integrate the operations of the new entity. By having a dedicated team, it allows us to segregate that workload and dedicate those employees to the integration efforts and allow our existing employees to focus on welcoming the new team to our family, but not necessarily having to do all the work required in an integration.
Balance your risk
Determining if isolating, creating a separate team is necessary is probably unique to every business. The one common trait to all would be the risk associated with an acquisition. If it’s a big acquisition, if it were me, I’d be thinking about a dedicated team. If you’re doing a lot of small acquisitions, probably the same thing because it puts a lot of stress on your business. You’re investing a lot of money in these acquisitions, so there is risk associated with that.
The challenge is once you take them out of their day-to-day jobs, you have to backfill those people. So you have to have a place for them to land. So you have to balance that risk along with the concerns the employees are going to have over, ‘Hey, if I only do this for six months, what happens to me?’ You have to have that career path for the employee. Now I would say employees tend to really react positively to being on a team like this. From a career experience, people view it as very favorable to their resume. So I think there is some upside to that, but I think you still have to think about pulling talented people out of their day-to-day jobs. What’s the impact on those people? You have to balance that against what’s the risk to my business? If I don’t do this, what’s the potential consequence?
You can’t do everything
As a business leader, I’m always engaged with details and I want to make sure things are going smoothly. It can be difficult, particularly on acquisitions, to step away because of the risk associated with it and the cost of the investment. On the flip side, we have a fast-growing business. So if I have good talented people over there executing, I’m going to let them do their thing and get out of the way. I would say that’s not easy for every leader to do, particularly given that acquisitions carry so much risk to the business.
My advice is find good people and let them do their thing. But still keep involved and pay attention because ultimately, the buck stops here and if it doesn’t go well, I’m accountable. But if you as a leader want to do everything, it’s going to fail. You can’t. There are too many variables associated with acquiring a company. Having good people, letting them do their thing, keeping an eye on it, that’s my advice for someone in a similar situation trying to integrate — whether it’s one or multiple acquisitions.
Set your company’s goals
At a high level, we know our industry. I know our industry, I know our competitors. We’re always listening. We’re always talking. The market knows we’re buying right now, so we get phone calls. We’re also though looking for specifics in our acquisition process. Every business is different. In our case, it’s revenue, geography, technical expertise. To the extent that we have specific goals, I may go back to that team and push them to find those specific opportunities. If you can find someone with this intellectual property, let’s go after that group. If you can find someone in this geography, let’s go after them.
In that regard, they will do research on those specific requests and maybe find opportunities we didn’t know about. But generally, it’s my job to frame the goals, to set the objectives and then allow them to execute on those goals and go find the companies to fill the pipeline. We’ve got probably 25 target acquisitions in our pipeline right now and they fit one or more of those criteria. At least half of them were found by the team out there making phone calls and bubbling up leads.
Know your available capital
Some advice or thoughts that I have for executives who are running a process like this is first of all, you have to know how much capital you have to do it. You can’t put together a plan and execute a plan without knowing how much capital is available. Once you have that figured out, then you have to put your strategy together. Team is great, but if they don’t know where to go and what to look for or what to buy, they’re going to get to the end of the road and then you’re going to tell them, ‘That’s not what I was thinking. That’s not the right strategy.’ So it’s incumbent on the leader to make sure they set the right tone and that they have the capital available to execute on the plan.