‘First impressions last’: The first 100 days of new ownership

Once a business is purchased, there are several critical considerations that the Executive Team need to be cognisant of once new owners “arrive”.

Purchasing a business can take numerous forms. There can be new owners, purchasing a competitor or indeed a distressed purchase. Once gone through a sale, the champagne bottles have been popped, the pleasantries gone through, then begins the first 100 days… an important period for the business to make a good impression!

The first 100 days is critical in the new relationship between the Owners and the Executive Team. It is a time to forge new relationships, to have a clean sweep, get our “house in order” and calibrate the business on a path of new, continued, or indeed embryonic opportunities.

Don’t forget, new owners have their own stakeholders, shareholders in the form of banks, pension funds and investment houses who, in turn, have financial commitments, relationships with government officials, pension fund obligations and financial covenants to honour.

Steps that can help with first impressions include:

1. Culture: Cultural differences can be difficult to keep a grip on. Different organisations have alternative views on the varying levels of formality, the amount of analysis undertaken to substantiate the figures and indeed the owner’s “openness” to the new Executive Team.

Whilst the first 100 days can be seen as a “honeymoon period”, it is important to fully understand each other to determine what is considered a red flag and what is considered less so.

2. No surprises: Keep surprises for Christmas Day. For a culture of openness, support and collaboration to prevail, then it is important to be “up front” about any potentially contentious points. Provide clarification if the Executive Team do not feel some issues (during the due-diligence process) have not been honed-in on.

3. Board: Quickly seek to understand the wishes of the new owners around the board, structure, its configuration, whether owners feel there are any gaps and whether a new Chairman, Non-Executive Directors or Executive Directors are required. Also, ensure new owners are aware of any regulatory endorsement and whether regulatory/statutory consents are required.

4. Risk-register: Ensure the risks identified as part of due-diligence have been fully appreciated by new owners. Owners are likely to be experienced, but the Executive Team need to ensure that nothing has been lost in translation and what may not have been seen as a major risk for an outgoing owner, may well be for some new owners. For instance, the revised financial parameters the business is expected to work within.

5. IT: Resilience and “Fitness for Purpose”: Ensuring that technical support is in place for both hardware and software is critical. When owners sell their business, it is important that support arrangements do not evaporate. Having the appropriate expertise is crucial. These arrangements can be contracted or brought in-house. Beware of simply planning to transition to the new owners’ IT software and hardware.

6. Brand: Having disclosed all relevant facts and correspondence around statutory, customer or competitor complaints, it is an excellent use of the first 100 days to review any potential brand damage. The good news is that this shouldn’t be a serious issue if there has been full disclosure as part of the due-diligence process.

7. Asset manager (AM): Typically, the AM is the first point of contact for the business. Be open to the AM and their team in helping to potentially lobby support for grants or government incentives, financial restructuring, refinancing the business or to understand innovative opportunities that exist with other portfolio companies or assets. Offering a collaborative hand of friendship to other portfolio companies, “people-marking” and developing long-term relationships is invaluable, especially in the early days of this new relationship.

It is important to remember, the Asset Manager and indeed the Asset Management Teams are not likely to be the same people who were involved in the purchase, and therefore the due-diligence process.

8. Contracts and service level agreements: These agreements with either new service providers or legacy providers must be agreed, financial terms settled and importantly they must be signed by appropriately authorised parties.

A dedicated and experienced resource needs to ensure operational arrangements are in place and legally contracted. This will help with business-as-usual and the ongoing day-to-day running of the business in a seamless manner.

As a synopsis, new ownership is an excellent opportunity to, not necessarily re-invent ourselves, but for the Executive Team and the wider business to recalibrate. Time is not free, but an excellent use of time is to use the first 100 days to make sure relationships are forged, anomalies are ironed out and any potential for future misunderstanding is alleviated.

Please remember first impressions last, so work hard on those factors which will pay dividends in the future, for everyone involved, not least owners, the Executive Team and key stakeholders.

Critically, keep surprises for Christmas!

Michael Scott Consulting Ltd
T: 07973 896787
E: scottmpg1969@hotmail.com