The Fifteen Months We Left on the Table

Audiobooks count as reading. I'll defend that position to anyone who wants to fight about it, though I'll admit the case is strongest with a book like this one — Brad Jacobs' second, How to Make a Few More Billion Dollars. It isn't a book that asks you to hold twelve threads in your head at once. Jacobs takes an extraordinary career, pulls out the handful of things that actually mattered, and simplifies them until they sound obvious. They aren't. That's the trick.

So I'm mowing the lawn, listening, and somewhere around the back fence I stop thinking about his deals and start thinking about mine.

The first big deal I did at the cannabis company I worked at was buying either the largest or the second-largest operator in a single state, depending on the month you measured. It was a reach for us. Their revenue was bigger than ours. So were their earnings. We were in more states and theoretically had a lot more growth ahead of us, so we were valued a great deal higher — which is how a smaller company ends up buying a bigger one.

It wasn't the pricing I was reminiscing about, though. It was the integration.

What he does now, after learning a few things

Jacobs negotiates for immediate access to the target's people. Not after closing. Immediately, as a term of the deal.

He isn't gun-jumping. He's not running a company he doesn't own yet. But in that gap between signing and closing, his teams are sitting with their teams, asking questions, learning the business, and figuring out how the two systems and the two cultures actually fit together. By the time the deal closes, integration isn't starting. It's continuing.

What we did instead

Take this as a confession.

We held that company at an extreme arm's length. There was a milestone earnout, which pointed everyone at the right goal — and which we then used, without quite admitting it to ourselves, as a reason to stay out of the way. We did no real integration analysis and essentially no integration, payroll and HR aside, until closing day.

That's nine months, gone. Then, in hindsight, we lost another six on the other side, because we didn't want to break anything or upset anyone. Do no harm. It sounds responsible and mature. It was a very bad idea.

Fifteen months. On a deal that size, that isn't a delay. That's a different deal.

What we actually gave up wasn't a schedule. It was cross-pollination — best practices moving in both directions, including from them to us, which is the part buyers conveniently forget. And it was the cultural fold. Bringing a few hundred people into your company is easier at month two, when everyone is still curious about each other, than it is at month fifteen, when both sides have decided what they think.

Use the gap

If you're buying a company, you're making one of the largest investments your business will ever make. So use every day you've paid for.

There is a line in the sand, and it's a real one. Talk to your lawyers, know exactly where it sits, and don't cross it — you don't get to make the target change how it operates before you own it. Everything short of that line is available to you, and most buyers leave nearly all of it sitting there.

• Get people in the same room. Not a Zoom here and there. Management teams onsite at each other's facilities, watching how the work actually gets done and asking why it's done that way.
• Ask the two questions. Now that we've signed, what do I really need to know? And my favorite: What question were you afraid I was going to ask during diligence? You will learn more in those two answers than in a month of data room archaeology.
• Demand reporting. Weekly revenue, monthly profitability. Not to manage them — to stop being surprised by them.
• Build a real Day 1 plan. Not just email, payroll, and HR. Reporting lines, management structure, financial reporting, system transitions, and the strategic plan you're going to need six months in.

Closing day is not the end of the deal. It's the beginning of the company. Everything you learn before it is free, and everything you postpone until after it costs you twice — once in the waiting, and once in the re-learning.

Don't wait. Start immediately.