Identity Crisis: Companies strive to preserve their unique culture after an acquisition

Acquiring another company can propel a business to new heights with an influx of resources, manpower and ideas, but those additions can also potentially water down or derail the culture that made the business successful enough to consider acquisition in the first place.

However, a little forethought, conscientiousness and communication can go a long way in ensuring transitions go smoothly and benefit the company.

Communicate and connect

Over the last three years, CBC Advisors has grown 310 percent, including acquisitions last year that doubled the Salt Lake-based company, giving it 30 offices in 11 states. Before that boom, the company’s most notable acquisition was of an office in American Fork with around 30 employees, says Lew Cramer, CEO of CBC Advisors. When looking at the national expansion, Cramer says, everyone on the executive team knew it would be a whole different ballgame.

“It’s a whole different challenge. It’s all about communication, communication, communication,” he says. “We were aware at the outset that we had to keep communicating.”

CBC Advisors hired a communications specialist with the specific goal to help keep all of the offices across the nation on the same page, Cramer says, and the administrative team chats weekly to make sure all concerns from all the offices are being addressed and everyone is on the same page.

“We want people to have a forum to bring something up. It’s a very safe environment,” he says.

Regular meetings and strong communication have also helped in acquisitions big and small by ExtraSpace Storage, says Clint Halverson, vice president of human resources at ExtraSpace Storage. ExtraSpace’s acquisitions range from a single mom-and-pop property to large chains, and the protocol can vary greatly based on the size and needs of the new assets, he says, but communication is a constant.

When ExtraSpace acquires a new property, the senior administrative team addresses questions and concerns with a series of town hall-like conference calls with the new managers and sponsors an in-person town hall meeting to meet each employee face-to-face. The administrative team continues having regular contact with each location with a rotating schedule of visits, Halverson says.

“We try to over-communicate, we try to be in front of them in these town halls. It’s the little things—getting them into their uniforms, a small gift to say thanks for joining our team, and then after we’ll do town hall meetings there,” he says. “We’re hitting every employee in the company about every 18 months to two years, and with 3,400 employees, that’s a lot, but that’s our culture and you don’t get better unless you listen to people.”

Halverson says little things, such as a small gift, communication and ensuring the new uniforms are ready and delivered to the new ExtraSpace location before it is set to open, help make employees feel valued and engaged in the new direction.

Another key is making sure the offices of newly acquired locations or properties have the same feel as the headquarters office, says Anita Grantham, chief people officer of Pluralsight, which recently completed its eighth acquisition in the last three-and-a-half years.

“That’s been the toughest one, making sure our remote offices feel connected to the mothership,” she says.

The administrative team has put in a lot of effort into integrating unifying hallmarks to the new offices, so the same atmosphere is present throughout the company’s facilities, no matter where they might be geographically, she says. But care is also put into preserving hallmarks of the individual offices, so employees don’t feel out of place in their own workspace, she says, such as letting one location keep a Nerf wall in their office.

Companies also need to understand that, try as they might, no two locations can ever be identical, because of differences in market, local culture and other factors.

“Despite the fact that we’d love markets to be the same, they’re individual markets and we have to look at them like that,” Cramer says.

Lead the change

A strong leadership team can make the difference between a smooth and a rocky transition.

“You have to be flexible. You have to understand what has made you great and hold onto that, but do that also in an environment of change. If we’re not willing to change and we stagnate, it’s hard to grow and advance and be better,” says Halverson. “The more we can embrace change as a leadership team during a transition, the more everyone else on the team is going to be open to change.”

While communication and integrating the old with the new help smooth over transitions after the fact, the most vital steps to preserving company culture happen before the deal is made. Vetting the existing culture of the potential acquisition and prevailing work philosophy and making sure it aligns with what a company wants to promote can save a lot of heartache after the fact.

“I think it makes it easier to make acquisitions, when we have a strong purpose and strong value system,” Grantham says. “When we look to acquire companies, we look to that company’s culture to see if it meshes with Pluralsight’s. Then it’s a much more seamless integration of the two.”

When ExtraSpace looks at potential properties, the employee ethos is evaluated as stringently as location and market.

“One thing we really try to look for that we can’t train is passion, that drive for excellence—someone who is engaged in their own career,” Halverson says. “We believe that none of us is as smart as all of us, so we look for people who are good team players, and communication is huge for us. We try to make sure we’re very open and transparent. We want people to feel like they have a career. We love to grow within.”

Seek clarity

More than employees or locations, companies should first ask themselves the purpose of the acquisition—will it help them grow in a specific way, or will it give them assets they cannot otherwise obtain—to keep them from growing just to grow.

“We’re not just getting big to get big. We’re getting big because we think we have a better solution to help clients. We think we have the scale and scope to bring solutions. We didn’t want to get with a bunch of jerks. We wanted to get with people we wanted to do business with,” Cramer says, noting that the acquired offices were in part selected because of their employees, and the people chosen to stay on were picked because of a value system and commitment to service and professionalism that matched CBC Advisors’ existing philosophy.

In Pluralsight’s case, their most recent acquisition was of a company they had worked with for more than a year in an effort to expand a specific area of their product offerings beyond what they could do with their current level of association.

“Content is such a strategic advantage for us and we wanted to be more thoughtful about how we were providing content,” Grantham says. “We thought through acquisition we could do that from a stronger position acquiring them rather than them being a separate entity.”

Thinking through the reasons behind an acquisition can also help a company plan for the changes in company operations and product release and support that can otherwise be a stumbling block for a business, she says. Those questions should also address whether the old founders will stay on and in what capacity, and how the old processes from the acquired company will be adjusted or changed. And if those questions can’t be answered, perhaps the company should consider stepping back or slowing down until they can be, she says.

“Get really clear about what that acquisition will do and then talk about how that will change things … All of those things in the due-diligence process have to be really thoughtful,” she says. “Acquisition can add to size and girth fast, but it can ultimately lead to the company’s demise.”

“It’s better to grow slow than fast,” she adds.