[My Biggest Mistake] Impatiently Integrating a Newly Acquired Company

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July 31, 2012

As our industry evolves, progressive companies are changing the way we do business. New products, technology and the demand for more environmentally sound solutions are driving our progress. But what happens when a company with this “new school” mentality acquires a company with an “old school” way of doing business? The transition requires patience, strategic thinking and outstanding communication with both customers and employees.

Several years ago, Bug Busters USA acquired a $1.5 million company whose business model was based on a more traditional mindset. We had acquired businesses before, but integrating this one into our corporate structure was particularly challenging — in fact, when all was said and done, we were able to retain only about 65 percent of that company’s business. The challenges we faced were based on cultural differences between the acquired and parent companies:

  • Bug Busters typically visits customers quarterly and begins each visit with an outdoor IPM inspection, followed when needed by application of low-impact, environmentally friendly products tailored to the specific pests we discover. Technicians of the acquired company had established a pattern of visiting customers monthly, treating primarily indoors and using traditional baseboard spray applications.
  • Relationships between technicians and customers tended to be more personal than professional in the acquired company due to the frequent face-to-face time as well as other practices, such as personal calls from the owner’s wife to schedule appointments. (Bug Busters uses an automated system to alert customers of upcoming visits and invite them to call if they require indoor service as well.)
  • Bug Busters technicians are required to be computer-savvy. We were early adopters of handheld technology, have GPS units and accident-avoidance cameras installed in all of our vehicles, and do all scheduling electronically. The majority of the technicians of the acquired company lacked the skills necessary to tap into our technological tools.
  • With five locations and approximately 70 employees, Bug Busters requires a written playbook to ensure consistency of quality, service and expectations. Every employee is issued a copy of our policies and procedures and is expected to adhere to them. Employees of the acquired company had much more leeway in deciding how they would provide service.


Clearly, both technicians and customers needed to understand the advantages of Bug Busters’ progressive methods. We needed to educate technicians about the benefits of using products with longer residual effects and get them used to the notion that some visits are for inspection only, with no need to apply chemicals. Then we needed those technicians to go out and enlighten their customers as to why this approach improves efficacy and provides a safer alternative to excessive spraying.

In many cases, this simply didn’t happen. Resisting the dramatic cultural changes, many of the technicians advised their customers that they didn’t really believe in the new methods; in fact, several of them left Bug Busters to start their own businesses, some taking established customers with them. We lost half of the employees of that company, as well as a significant chunk of business, in the first two years following acquisition.

Our mistake was underestimating the magnitude of this cultural shift for them and attempting to do in a year or two what we should have spent four years doing. By trying to change their mindsets — and their business model — too quickly, we alienated our new employees and the customers they had served for many years.


Lesson Learned. The lesson learned was this: When you’re a larger company looking to acquire smaller ones, it’s critical to evaluate the degree of difference between the two corporate cultures and develop a strategic integration plan that’s appropriate for the level of change that needs to take place.

As a company serving residential and commercial customers in five states — Georgia, Alabama, North and South Carolina and Tennessee — Bug Busters continues to seek acquisition opportunities that have the potential to help us keep growing. But we’re smarter about the integration process now. We understand how to look for a mutually beneficial fit and know that we must be both strategic and patient throughout the integration process.


 

As told to PCT contributing writer Donna DeFranco.