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As a young man, when I looked to the future and imagined what it would feel like to have achieved my ambitions, I always imagined a serene version of myself, satisfied with his accomplishments and his place in the world was sure.
Even if some of my youth hopes remain unfulfilled (the ranking in the German sailing championship 420 is still on the wish list, although I was close), I am happy to say that I was able to look my younger self in the eyes professionally and tell him that I didn’t let him down.
However, I would have to make one thing clear to him: There is nothing relaxing about success. The performance is almost always immediately accompanied by the fear of maintaining it – not to mention the pressure to do bigger and better next time. And let’s not forget our old friend, the cheat syndrome, who is always there to complicate things further.
I am not complaining. I realized that a healthy sense of danger is not a side effect of performance. It’s essential for that. When failure has no consequences, there is little incentive to avoid it.
There is, of course, a lot of talk about the “F†word in the tech scene (although some of these “fail fast†companies may be more liberal these days using the other four-letter term). But even if a mishap in development or innovation can be beneficial, there is one business area on which the consequences of errors have a disproportionate influence: M&A.
I’m not talking about the financial consequences of failure (although these are far from insignificant). When you bring companies together, you are not just integrating processes, balance sheets, and products or services. They bring people and cultures together – in the case of the takeover of the company, passionate people who have put their lives, their souls and possibly their savings into their endeavors. This stuff is really important.
In the last 12 months, we at Incubeta have acquired and successfully integrated no fewer than three companies, from an end-to-end e-commerce optimizer in Ireland to a marketplace agency in the Netherlands and an Australian analytics powerhouse , and there is a fourth, Middle East-based company that we are close to announcing – not to mention the other four candidates in the expanded pipeline.
With such a hit rate, you’d think we got the process in order – it’s just a matter of letting it run. In response, I would have to say the same thing to my young self: the smoother something looks, the more happens behind the scenes. But that’s exactly what is fun.
I have my own theories about what makes a good fit and a smooth integration. I’ll get to that in a moment. But before I do that, I thought it would be an idea to talk to the people for whom it was more important than me: the founders.
The Groundswell acquisition was announced six months ago, which of course was preceded by a month-long process, so it’s fair to say that founders Mark and Richard have left the honeymoon buzz behind them. Still, it was great to hear that the synergy we felt at that first meeting felt as fresh to them as it did to us when I spoke to them:
“When you talk to others, it’s completely natural, you just have a gut feeling: Are they real? That was the only thing that was consistent from the first meeting we had to the final stage of agreeing the deal. It just made us feel good and felt very real. “
It is interesting how often this phrase “gut feeling” comes up during these conversations and in our internal interactions as we go through the process. It’s part of the human factor that I think is too often downplayed in general in the business world, and especially when it comes to acquisitions where everyone is focused on data-driven due diligence. Tim van der Bilt, founder of Maze-One, agrees:
“There was so much energy in the room. Literally from the first minute – although we’ve never met. That was the beginning. We felt that part of the culture and that hasn’t changed. “
When you reach out to companies across categories and cultural boundaries, the human experience becomes more important than ever. The organization we speak to in the Middle East shared this insight:
“Incubeta is the most transparent partner we have met. There is this feeling that we will be successful together when you consider how much energy there is in the team – this gut feeling ultimately led us to Incubeta and not to everyone else. “
Much has been written about the power (and danger) of gut instinct for people who have a lot more references than me. We have learned to take into account the importance of framing and quick and slow thinking in our decision making. We know that in many cases our gut can be a false friend directing us in a direction that is too influenced by our own subjective experience.
Nonetheless, hand in hand with the fallibility of our own reasoning goes the experience we have of what it feels like when something goes right. For me, that’s my gut feeling: non-verbal knowledge. Years of trial and error that lead to an instinctive, intuitive indicator of success. This is one area where I would say to my younger self, “This is where you’ll get smarter.” After all, there is one good thing about getting older: with graying hair and wrinkles comes wisdom, experience and a healthy dose of self-confidence when making decisions.
That’s why it’s so important to involve a diverse team at every stage and encourage them to listen to their gut instincts too. I see it as an extension of the gene pool of experience: hundreds of years and a whole world of diverse human interactions result in a sense of connectedness that is both felt and understood. I think that’s what Tim of Maze-One meant when he talked about the “energy in space”.
It’s not something we can quantify – and neither should we try. But it is something that can be cared for and improved. The growth imperative is rational, but the means to achieve it are emotional. The combination of both makes collaboration not only possible in the truest sense of the word, but also rewarding.
Disclaimer: The article was written by Lars Lehne. In this article, Lars Lehne, CEO of Incubeta, examines the power of instinct as a M&A success factor.
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