What does acquisition look like? Fans of HBO’s “Silicon Valley” will recall a recent scene where a large corporation offers to acquire tech startup Pied Piper. Pied Piper’s Richard Hendricks vehemently opposes and, in a matter-of-fact posture, replies that he doesn’t want everything he’s building to “become the property of your giant, soulless corporation.”
The other CEO fires back, saying Hendricks would inevitably grow Pied Piper into yet another big soulless corporation anyhow.
To Hendricks, the “A” word is a bad word. However, in the real world, good or bad acquisitions are an everyday occurrence. In fact, just two days ago the San Mateo-based company Loqate announced it had been acquired for $13.4 million by GBGroup, an identity intelligence company in the United Kingdom.
As a result of the acquisition, GBGroup CEO Richard Lawson expects “business will continue to grow and the customer base will provide further opportunities for the cross sell of GBG products and services.”
So what does all of this mean? Bambi Francisco, journalist and CEO of Vator, Inc. sat down with SFGate and shared her take on acquisitions, how and why and when they get ugly.
“Sometimes it’s a good thing to be acquired, especially by a bigger and more established company,” Francisco said.
Francisco, who has been through a number of acquisitions, shared the most common reasons companies get acquired:
- The acquiring company likes the talent, the team and skill sets and believes this combination can be brought on to add value.
- The smaller company’s product might be a strong competitor. Acquiring the company may be an effort to shut down competition and bring its talent on as part of their team. “In some cases this may or may not involve shutting down the product offered by the acquired company,” she said. “They might like it and blend remnants or aspects into the larger company.”
- A company with a big distribution channel might acquire a company for a product they like and can easily distribute. Essentially, one company has the product and the other has the distribution channel.
The third scenario most often feels like a coup to employees of the acquired company, according to Francisco.
“It can be nasty. Sometimes there’s infighting as the acquired company struggles with the changing group dynamics and loss of its identity as a company,” she said.
Francisco offers a bit of advice for employees of companies in the midst of an acquisition.
“Understand what you have built might not carry on,” she said. “But what matters is your expertise and your skills, so be ready to say goodbye to some of things you have been working on and that’s OK. Know that 65 to 75 percent of the actual projects of services of the acquired company goes away or is integrated. Don’t be surprised if that happens.”
Are you or have you been an employee of a company that was acquired? If so, share your experience with us. We’d like to hear from you.