This article is a continuation of the series on the book “Prince”. Read the first part for better clarity.
A business acquisition is a normal phenomenon. The team or business gets acquired off and most of the employees continue to work there while the new management takes charge. This acquisition is akin to the conquering of new kingdoms and bringing them under your regime. The change in ruling hands sends jitters down to the bottom level of office boys who know their fate might be taking a turn here.
Experience says that ob business acquisition situation for employees often change from bad to worse. The new management recognizes the liberties and the perks provided by the former owners and how people had been comfortable in it. Maybe these liberties and the loss of the work due to indulgence in them had cost them the business. So the first thing the new management generally does is to pass new orders which the employees must follow leading to some unhappiness. This unhappiness should be avoided at all cost.
New instructions need to be delivered to bring the old and the new business under the same laws and working principles. However, care must be taken off the delivery and the unhappiness it brings to people. Every time a new acquisition happens, you will hear “It is business as usual”. It should be kept as business as loyal in reality too and not just a PR statement.
If you are buying a new team or business, make sure you do not change the old laws as advocated by Machiavelli “He who has annexed them, if he wishes to hold them, has only to bear in mind two considerations: the one, that the family of their former lord is extinguished; the other, that neither their laws nor their taxes are altered, so that in a very short time they will become entirely one body with the old principality.” At least till the time they become one, avoid passing any new order.
“The family of their former lord is extinguished…” can be read as no one from the old founding team remains in the organization and not a killing spree. This comes from the suspicion that the earlier prince might be plotting against new. All unnecessary doubts must be erased in the first instance. So if you decide that the earlier founding team does not continue with the daily operations, it won’t be a bad idea as per Old Nick. Start preparing some of your managers for the new acquisition.
However, there are instances of decisions when the earlier founding members continued with the enterprise. This mostly is an appreciation of their knowledge of the sector and the operations to which the new team might take some time. This becomes more predominant in cases where the buying team is foreign as the operations can become a nightmare. With the world getting smaller and any wrongdoing spreading like wildfire the old founding members would stay away from such a behavior. However, an inherent risk still prevails.
To this Machiavelli would have asked the new management to be careful as selling out their business is not a happy one. The injury one receives is a lighter one and close to the heart. People cannot avenge themselves of the heavy injuries but for lighter ones they will.
Machiavelli proposes the below points for such new acquisitions:
1. Establish own princedom or colonies of own people in the new acquisition
This should be the preferred mode for the new acquisition as to establish oneself as the new boss and bring in own people in various divisions. People from previous domains will establish you as the new chief and others would copy them to follow the instructions. Malice if any will be forgotten soon.
2. Indulge the lower powers of the business without increasing their power
The new management should connect with the lower level managers and the executives on a more frequent basis on new acquisitions. This will have far-reaching implications then one can imagine.
First, negative influence (If any) of people high up on the employees will be mitigated. It is well known that senior management people join or leave organizations with their team of followers which can create a ripple effect. The indulging of the employees will reduce the threat for they are the real backbone of the organization.
Secondly, the morale of the employees on being treated differently will be increased. The productivity of the organization will not be impacted because of such a change.
Thirdly, this exercise will give a very good insight of the organization they have acquired, something which the balance sheets and P&L cannot give.
Fourthly, the pain points and the areas of improvisations for them to exercise will be highlighted. Employees know the organization far better than the management itself. They know challenges they have been facing, operational and logistics nightmares they have been coping with in silent.
Lastly, with a close observation, they can find the power points to remove they might have missed out.
3. Get rid of the powerful people
Everyone loves power and as you rise up the ladder, you start enjoying it. It is this earlier power that the new management should get rid of.
Ever wondered why buyouts are often followed by the exodus of managers. Cost cutting, streamlining are basically excuses provided by the new management to ensure that power is balanced in their favor.
4. Stop a foreign power to gain reputation
Change has a good amount of chaos in it which can be used by management to their advantage. The leaving employees (Probably join the competition) will take with them the clientele they had created for the organization, the best resources they have worked with. This will be your loss and the advantage of the competition. Make sure that a right message is sent to the employees before they even start putting down the papers, clients before they worry about the existing projects.
To strengthen such an acquisition Machiavelli says “he who has acquired them should go and reside there.” The new management should not simply put up another team and operate from distance. Instead, they should work right from the office and address issues immediately for “if one is on the spot, disorders are seen as they spring up, and one can quickly remedy them.” Although this might not look like an issue as information is available digitally along with a faster means of transportation. But the problems to have become fast-paced than the earlier ones.
As a precautionary measure, the new management should in practice work from the new office and interact with people to make their presence felt.
The reason for all the above steps is not for the present challenges the acquirer might face but the future ones.
Machiavelli advises not to enjoy the current time prepare for the future “Let us not enjoy the benefits of the time — but rather the benefits of their own valor and prudence, for time drives everything before it and is able to bring with it good as well as evil, and evil as well as good.”