When Wolf-Gordon announced it was buying Andor Willow and Look Walls and Interiors, the logic behind the acquisition was easy to read. The private equity owner, Charger Investment Partners, wants a broader product offering, a larger customer base and accelerated growth. Both acquisitions deliver that. Andor Willow also appears to bring digitally native skills that could modernise and accelerate the digital capabilities of businesse that bought it. It looks like a smart move, and probably one worth paying a premium for.
But a smart move on paper is the start of the work, not the end of it. Three organizations are about to become one, and the leaders at Wolf-Gordon will be judged on what they have ready by the day the deal goes live, not on how good the announcement sounded. Here are some thoughts on what they should be focusing on right now, and not wait for ‘go live’ or Day 1.
- Start with the purpose, then build everything around it
When two businesses come together, the first question is simple. What is this deal actually for?
a) The primary purpose in this case is product leadership.
Extending the portfolio is the heart of these acquisitions, so product has to be the first priority in the plan. That means a clear and compelling product strategy, research and clarity on customer product channels, where they stand and what their ambitions are on product channel leadership and market share, as well as consolidated plans for product design, pipeline and manufacturing, innovation, competitor intelligence and market trends. All of this needs to be well underway before going live, and it needs to sit at the center of plans for the first 100 days and beyond.
b) The secondary, but equally important focus is the financial business case.
This should follow the same discipline. Market share and revenue growth are the obvious gains. The savings are less glamorous: integrating back-office functions and technology systems, combining sales, marketing and other teams and synergising costs, with the headcount decisions that come with that. For a private equity owner these outcomes are not negotiable. Leaders need a clear strategy and a path to each one, not a general sense of direction.
- Get to know the people before you own the business
Most of the value in a deal like this sits in the top two or three layers of the new organization. Those are the people who will decide whether the future you paid for actually arrives.
So, get to know them early. Be clear about skills, competencies, and where each team over or underperforms. Work with HR to run a full skills and cost-benefit analysis of every department, in your own organization as well as in the two you are acquiring. Then bring product, sales and marketing and operations leaders together and let them help plan what comes next. People who help build the future tend to deliver it.
- Protect the customer while you plan the growth
Customer relationships and live sales pipelines are the most exposed and at risk assets in any integration. They are also easy to neglect, because everyone is busy designing the new growth and synergy plan.
Put clear accountability in place from the first day for customer communication and for existing pipeline protection and management. It is a modest piece of work that removes a great deal of risk.
- Culture is not for later
Bringing three organizations together is hard enough without guessing at how each one works. Understand the similarities and differences early. Then decide what kind of culture the larger organization needs and wants, and build it with the people who will live in it.
Delay this and the cost is predictable: confusion, lost talent, and organizational pain that lasts far longer than anyone budgeted for.
- Finally, do NOT make what I call the ‘1000 Lessons Mistake’
Years ago, a company I worked for decided that India, where it had a very limited presence, was huge, innovative and full of growth potential. It was right. India was all of those things, and still is.
What followed is something I have often described as the 1000 Lessons Mistake.
The company rushed to buy several fast growing, innovative businesses, especially in technology and digital. It spent large sums based on what those businesses might become. It offered founders and leaders large incentives to stay, but only for short periods after the sale. Much of the work was done from headquarters in the west, with consultants close to headquarters. And it communicated a great deal, to the organization, to investors and to the press, about how successful all of this would be.
What it did not do matters more. It did not apply its own usually rigorous standards of diligence and financial gateways. Multiples into the hundreds were paid, far beyond its own formulas for acquisitions and investments. It did not look critically at the market and the competitors, nor engage on the ground in India to form its own view. It relied on the views and projections of the sellers.
It did not defer part of the payments, nor tie the founders into longer contracts linked to top line growth and bottom line performance, which is what large multiples for future value call for. Above all, it shut out its own people in India. The hubris at headquarters meant local staff, and trusted local consultants, were excluded from the process entirely. Nobody asked the people who understood the market.
At least five acquisitions followed. None delivered growth or became profitable, and most were abandoned. Hundreds of millions of pounds and dollars were lost. The founders, who had sold a good story, were left rich.
The lesson
A story is easy to sell and expensive to buy. The companies that get this right do the slow, unglamorous work first. They test the numbers against their own standards, listen to the people closest to the market, tie reward to results, and take a longer view of both the transactions and what they tell investors.
Wolf-Gordon has a clear purpose, a strong owner and an opportunity worth paying for. What will decide the outcome is the plan built before the deal goes live: detailed plans, owned by named leaders, and covering product, financial synergies, customers, people and culture.
If the plan is ready on Day One, shareholders and investors will see it. If it is not, they will see that too.
