When buying a business, its employees and clients are one of the most important factors to assess; but they are all too often overlooked once the deal is completed.
Failing to make existing employees heard and help them integrate with a new workforce can result in culture clashes that lead to low morale, reduced productivity and even mass exoduses.
Customers can also feel uneasy during an acquisition and without the loyalty they had to the previous business, are more likely to leave if they feel they aren’t getting the same level of service.
In our latest blog post, we take a look at effective strategies that can be used when buying a business to improve staff and client retention.
Strategies for Retaining Staff During An Acquisition
Acquisitions can be a cause for concern for existing employees, who may feel their positions are threatened and that they are disadvantaged by not having a working relationship with the new owners.
On the other hand, employees you bring over (if any), may feel as if they have to tread lightly and change the way they do things to suit the existing culture and team; both of these can result in lower morale and job satisfaction.
Keeping both existing and new employees on board can pay dividends for your acquisition, with existing employees knowing the business inside out and your own team able to introduce new methods of working.
1. Communicate On a 1:1 Basis With Employees
With any acquisition, personalised and frequent communication with staff is critical to success. As soon as it is known that the acquisition is going ahead, employees on both sides may start to feel their role is under threat.
By communicating the terms of the deal with all employees on 1:1 basis if possible, you can explain what’s happening and how it is expected to impact them personally.
As well as putting the employee’s mind at ease, this 1 on 1 time gives you the chance to get to know the person meaning you’ll be better prepared for integrating them with potential new management styles and employees.
2. Consider Offering a Retention Incentive
A retention agreement is often used when a company is being sold to another in order to keep hold of the newly acquired talent working at the company that has been bought out.
The agreement not only gives the employee a guarantee that their position is safe, but also often includes some form of incentive such as a cash bonus, promotion or pay review if the employee stays at the company. In return, the business gets a guarantee that the employee will stay onboard.
Again, communication is important here to understand the expectations of employees and offer an appropriate retention incentive to ensure the most productive remain working at the company.
3.Understand Individual Strengths and Weaknesses
Understanding the strengths and weaknesses of employees is vital to ensuring a smooth integration of new and existing employees.
By understanding what each employee brings to the table, you will be able to better identify synergies (and potential clashes) with other employees.
Furthermore, this knowledge will help you make better managerial decisions in the future such as resourcing and allocation of work which in turn, can boost morale and get the most out of every employee.
Strategies for Retaining Clients During An Acquisition
One of the most important factors when acquiring a new business is the revenue it generates from the customers it currently has. However, much like employees, acquisitions can be a source of apprehensiveness for customers.
Along with feelings of uncertainty, customers may feel like they are not going to receive the same level of service or may want to follow their old point of contact to their new business (if they are not being kept on).
Keeping existing clients happy is fundamental to the success of the acquisition and the continued success of the business overall.
1.Speak With the Clients Directly
Like staff, communication is key to ensuring that clients do not end up leaving as a result of the acquisition. Any communication with existing customers should be transparent, personalised and above all, useful.
This communication should start long before the acquisition is completed so that existing clients know what is happening and how it impacts them.
In addition to updates about the acquisition, reaching out to clients on a 1:1 basis can make them feel valued and gives you the chance to develop a relationship with them.
2.Match the Level of Service Offered
A sure fire way to lose clients is to raise the prices or change the service they receive as soon as the acquisition is completed. In reality, your business should be looking to match or surpass the previous level of service they were offered.
Whilst respecting legacy client contracts can sometimes be less profitable, the lifetime value of the client is likely to greatly outweigh the reduced profitability in the long term.
If there is a particular client that you simply cannot serve in the same way, be it due to cost or in-house expertise; this should be communicated early and a compromise offered to keep them on board.
3.Offer an Incentive
Keeping hold of clients after an acquisition can be a struggle because the customers may feel no loyalty towards the new owners and have relationships with existing staff who may be leaving.
As well as keeping key existing employees in place and offering the same or better level of service, customers on the fence could be won over with an incentive.
This could be a discount on the overall cost of their contract if they choose to renew, invitations to company events, an invitation to come and meet the team, free merchandise, or a gift.
Ensure Your Acquisition is Successful
Buying a business is no easy feat and with so many moving parts, it can be easy for important considerations like customer and staff retention to be overlooked.
Using a business broker takes the weight off your shoulders, allowing you to focus your attention on nurturing relationships with new members of staff and clients.
From structuring the deal in a way that benefits you the most to reviewing getting you the best price, having a broker on your side makes the process significantly easier.
To find out more about how we can help your business acquisition go smoothly, give us a call today on 0117 379 0117 or fill out a contact form and we will get back to you.