- Exploring Acquisition And Greenfield Strategies
Maintaining Organizational Culture
A challenge that arises when expanding is maintaining the culture and values in the branch that exists in the headquarters and is part of the company’s mantra. This challenge is more pronounced when branches are gained through acquisition.
For Brame Specialty Company, a family-owned and run distributor in Durham, North Carolina, with six locations, ensuring a continuity of culture begins before a new branch is acquired. The company spends a great deal of time on the vetting process in order to be certain the new company will mesh with the parent company, says Mercer Stanfield, president and COO.
Brame looks for distributors who can adapt to the company and its unique traits.
“We make sure they can adapt and live out core values and core focus and that their target customers/markets is similarly aligned to ours,” says Stanfield.
KSS has a similar process when it comes to acquisitions. Stasiak cautions not every acquisition is a good one. When looking to make an acquisition, which Stasiak says is a lot of work, KSS emphasizes an alignment of cultures and values.
“If the acquisition does not have a similar culture and values, there is a probability for failure,” says Stasiak.
Stasiak recognizes that change will take time and that acquisitions must be allowed to hold on to their successes and what makes them unique.
While scouting and reviewing potential acquisition targets can minimize issues, adopting the culture of the headquarters still takes time. One question distributors need to answer is just how much of the culture the branch needs to adopt.
At Brady, management wants each branch to operate in the same way. Banks says prior ownership/management struggle with changing from the way they used to do things. Typically, they may follow procedures before they actually believe in them.
“The mental conversion of existing management until they are truly on board is a longer process, but eventually, you can’t tell them apart from a location that has been operating as Brady for 15 years,” says Banks. “It’s an evolution.”
Banks finds this transition can take a year on the processing side and three years on the culture side.
The transition can be challenging for all staff, not just leadership. Former staff tend to have 50 percent turnover in the first year, says Bader. On the flip side, those who do stay on tend to be solid employees.
In some cases, the transition to the headquarter’s culture never really takes place after acquisitions, says Workman. And that’s OK. Those in the market already have an advantage as they know the customer. The process of change, if there is one, should be subtle. He advises companies not to go in with all the answers, but instead question how things are done.
“Ask questions — for example, would it work better if you did it this way? Sometimes they are right, and other times they’ll say you’re right,” says Workman. “This leads to greater buy in.”
Replicating the culture of the headquarters in a greenfield branch is much simpler and more direct.
However, in a greenfield branch, staffing is the biggest challenge. To address it, many companies have a startup staff dedicated to developing new locations. This startup staff, which understands how the company works and its philosophy, transfer their knowledge to the greenfield. At Brady, each greenfield location always gets an experienced Brady employee — a lesson learned after staffing a management team of all new people.
“We struggled with our identity in the market for a while before ultimately inserting a strong Brady sales manager,” says Banks. “He overhauled the entire operation and now, we are the market leader in that location.”
Brady also takes this approach when making an acquisition as it puts experienced personnel in key roles throughout the business, including operational, warehouses and sales.
The communication process has a huge impact on the effectiveness of the branch. While the method and frequency depends on the distributor, it’s essential that branches have a clear understanding of methods of operations, expectations and organizational changes. Communication with branches is essential whether growth takes place through acquisition or greenfield.
Bader cautions that without a regular check-in, branch managers can feel left out on an island and drift further and further from headquarters.
“Reeling them back in to follow procedures can be challenging,” says Bader.
At Brame, there is a focus on remaining consistent throughout the company. They have staff solely dedicated to ensure operation metrics are carried out through the company. Although it takes time for branches to fall in line, they are quickly held accountable. Brame also has a weekly one-hour structured meeting focusing on various issues, and people from each branch are part of the call.
“Everyone has a say and a voice, and it makes them feel part of the team,” says Stanfield.
Being a physical presence is the key, says Stasiak. He is in the field every day and is at the branches on a routine basis.
“It’s good business to understand what goes on in each of the branches,” he says. “To do that, you have to go there.”
With Stasiak’s regular presence, he has built up relationships with the branches, which helps him to influence them towards the KSS methods of operations.
There is constant communication between the Brady branches and headquarters.
“Even though they operate as single locations and own entity, there is a lot of supporting,” says Banks.
Senior leadership is at the branches quarterly, and finances are reviewed monthly with the management team. However, various support members interact on a weekly or even daily period.
As distributors grow and open new locations, these branches will present challenges. But overcoming these can lead to new sales opportunities and success.
Larry Bernstein is a freelance writer based in Fair Lawn, New Jersey.
Exploring Acquisition And Greenfield Strategies