A founder CEO is faced with two options – either selling his company or buying
a complimentary company. The acquisition would fulfill his dream as CEO, but he
is concerned both about the synergy between the two entities and his ability to
manage the combined company. Should he sell, or buy the other company?
from the CEOs:
Given these concerns approach the
purchase opportunity skeptically. Be more prepared to say no than yes.
In evaluating his ability to run a
larger operation, the CEO should objectively assess his own abilities.
A good CEO is not a Superman. A good CEO
creates a viable business model and vision and hires a good team to bring that
model to reality.
Consider past accomplishments. In an
industry where nobody makes money the CEO has created a business model that is
sustainable, highly profitable, and technically superior. The only thing lacking
is size in terms of revenue.
The new opportunity – on the right terms
– can launch the company from dominance in a niche to dominance in a
significantly larger industry.
Assess the new opportunity both as a
technical and cultural match. If there is a good cultural match:
Fewer things must go right to add value.
The purchase provides a channel to a
The acquisition will rapidly speed company
The biggest concern will be the time to
manage both entities.
The most important factor will be the
chemistry between the two company teams. If the chemistry is good, the
combination offers reasonable assurance that the two teams will complement each
Look at the purchase as an opportunity to
build a win-win with enduring value.
In considering outside investors to
support the acquisition, be cautious about financial partners and the conditions
behind each financing option.
Situation: A company’s clients are demanding increasingly faster response times, particularly in areas that historically have not been considered mission critical. Clients also want faster answers to technical questions. Is this a common occurrence, and would you adjust pricing in response? How do you handle demands for faster delivery?
Advice from the CEOs:
If clients are demanding faster delivery, it’s entirely reasonable to tier your rates for different levels of service and delivery. Create cost / ROI breakdowns for different options, and let your clients make a business decision about the level of responsiveness that they need.
When brining on new clients, do a worst case down time analysis for the prospect as part of your evaluation process, then provide price options and let the prospect evaluate what is important to them. This is similar to different price / deductible levels with health or car insurance.
You will need to educate your current client base on what you are doing for them, and when they are reaching the upper levels of service provision under their current contract.
When you provide remote service, communicate what you have done.
Email individualized update reports to client contacts.
When you meet clients face to face, have a printout of service provided and toot your own horn about your service and delivery.
Be aware of the needs of clients who have distributed locations across time zones. A two-hour response time on the West Coast at 8:00 in the morning, translates to a half day for an East Coast location because they can’t call you until 11:00am Eastern time.
Interview with Anju Bajaj, CEO, Zuna Infotech, Inc.
Situation: The US economy is slowly trying to get back on its feet, but many potential obstacles remain. In the mid-west, there is good talent with deep enterprise-level IT experience, and lots of new young talent looking for positions. How can private business help to retool the workforce and boost employment?
Advice from Anju Bajaj:
Working in IT services to provide end-to-end technology solutions, we have found highly skilled talent in the American Midwest. In recent years, many seasoned IT professionals have lost their jobs as Midwestern companies downsized. These individuals have deep enterprise level IT skills, but may not be up to speed with the latest technologies. There are also many brilliant young people available who have good web-based technology skills, but no experience in legacy systems or the working of complex enterprises. Our focus is on cross-training both groups as they collaborate to build IT solutions for our customers.
We have found that by organizing these two groups into small teams, guided by a lead who knows both web-based and legacy systems, we can leverage their individual strengths to cross-train each other. It turns out that both sets of workers are smart, capable and, in live project settings, collaborate and acquire technical skills and domain knowledge relatively quickly.
The bigger and more subtle challenge is teaching younger workers about business processes. Each process must fit the workflow so that a process change in one area doesn’t produce difficulties in other areas. For this, you need to have people with deep expertise in functional and domain disciplines as well as technical experts. By teaming talent, we can produce functional experts who understand all areas. We have found that in three to six months of working together, about 25% of team members reach almost guru status; while the remaining 75% have become quite skilled.
Like most leading service providers, we at Zuna Infotech also build capability through our Centers of Excellence. We focus on developing practices within different industry verticals. With this comes knowledge and structure which we can then pass on through train-the-trainer programs.
We have been inspired by the desire to help keep US workers working while retooling their skills. The results that we’ve found to date have been very encouraging. We hope that this can provide a model for other companies.
Situation: Despite high unemployment, a company is finding it difficult to attract qualified candidates for technical positions. Many applicants don’t possess the requisite skills, and recent graduates aren’t responding to job posts. What works best attracting good candidates for open positions?
Advice of the Forum:
There is a wide array of specialized online resources to help you find qualified candidates. As an example, for tech candidates, try DICE.com. For a reasonable cost, you can post position on DICE.com or get employer access to the database and search it yourself using key words.
Better results come through networking with vendors, suppliers and customers to identify currently employed and highly qualified candidates. This should be regular company practice.
It is feasible to hire nationally and to relocate. As long as the employees and young and not invested, relocation expenses are not severe, and the Bay Area is appealing to young workers.
For distant candidates, companies frequently use an initial telephone interview, and then bring qualified candidates to the office for a face-to-face 2nd interview.
Push current employees for referrals. Give them a reward for successful hires that stay with the Company for a pre-set time period.
One company pays $5-10K for referred employees who stay with the company for 1 year. This is inexpensive in comparison with recruiter costs.
There are some highly targeted recruiters in Silicon Valley who specialize in technology positions. Get to know these companies. They may already have candidates for your positions.
A number of companies have had success with semester or summer interns from local colleges and graduate schools. Current students are highly aware of the challenges finding a job once they graduate, and unemployment among recent graduates is very high.
Key Words: Human Resources, Candidate, Technical, Applicant, Job Post, Networking, DICE.com, Relocate, Referral, Recruiter, Intern