Situation: A service company was acquired by a larger company. There are limited operational crossovers between the two, but where conflicts of interest arise the acquirer seems uninterested in addressing these. How do you manage conflicts of interest?
Advice from the CEOs:
- Within the company it is necessary to clarify what can be done autonomously and what must be done with the acquirer’s support.
- Where the company sees issues it can develop a recommended set of actions that will avoid pain – particularly where its systems are more developed than those of the acquirer.
- Reconstruct the acquirer’s motivations for the acquisition.
- Was their objective synergy or portfolio diversification? If it was a synergy play, then more structure and integration are needed.
- From observed behavior, it looks more like it was a portfolio diversification strategy. In this case they will expect the company to continue to perform as a quasi-independent structure, but under their umbrella.
- Given this, where do possible market synergies between the companies exist? Look for these and develop mutually beneficial alternatives.
- The CEO feels a responsibility to his company’s staff, assisting them to be more comfortable within the current situation.
- If the analysis of the acquirer’s motivations rings true, then share this with the company’s staff. If this is the case then they should not be seeking a lead from the acquirer but should concentrate on maintaining what company has done well over the years.
- What options are available for CEO?
- It is possible to maintain status quo. The company is getting new business and performing well.
- On the other hand, if the CEO is acting in the leadership role with decreasing focus and interest, this will not bode well for the organization or staff.
- In the latter case, set a timeline and date for departure. This can be some time out but should be comfortable for the CEO.
- Communicate this timeline to acquirer and when the time is right offer to help look for a successor.
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