How To Not Botch An M&A Deal (As A Buyer)

Stefan Palios

Matt Diederichs has been in the M&A world for some time–both at Hootsuite and Invoca, a Santa Barbara-based conversational AI platform–and integrated multiple startups from the buyer side. Speaking with ahead of his live conference talk, Matt shared his insights on how to not botch an M&A deal as a buyer.

Key takeaways:

  • Know your value thesis: how will this acquisition help you grow?
  • Integrations often fail due to ignoring your value thesis or ignoring the people aspect of the change.
  • A successful integration means bringing people along the change curve. 

Post-M&A integration is perhaps the most important part of any acquisition-based growth plan. It’s the step where you actually bring two companies, cultures, products, and customer bases together. But it’s also the step that, if done incorrectly, can blow up the entire investment.

During his tenure at Hootsuite and now Santa Barbara-based Invoca, Matt Diederichs has seen multiple acquisitions go well (and a couple go less smoothly). Speaking with ahead of his live conference talk, Matt shared how buyers can ensure integration goes smoothly.

Think like a strategist, not a banker

Startup M&A inevitably includes bankers, lawyers, and consultants. These professionals are highly valuable and focus on getting the deal done. However, your job as an internal leader is different as you have even more on your plate.

“I don't view my job just as getting a deal done,” said Matt. “I view it as ‘we have a thesis on what we think is going to create value.’”

Speaking about the real job of a buyer in an M&A transaction, Matt said there are two ways he thinks about creating value:

1. Reach acceleration: This could mean more customers, more revenue, a bigger geographic footprint, rolling up a competitor, or consolidating a regional player.

2. Adjacent building: Adding to the company’s overall product portfolio by talking to top customers, learning their overall needs, and seeing which adjacent products might make sense in your mix.

“We are very much looking at M&A as one of the biggest levers that we can use to pull towards our overall company strategy and direction,” said Matt. “M&A is the tactic, not the strategy itself.”

What makes post-M&A integration fail

Regardless of the reason for the acquisition, it’s bringing together two companies in some way. That means two cultures, product suites, roadmaps, customer bases, employee bases, and more. And it gets even more complex if the company you’re acquiring has acquired other companies in the past.

Complexity alone doesn’t cause failure, though.

In Matt’s experience, failure is often due to one of three factors. The first is what Matt calls not “pulling the thread.” He explained that when you begin with a thesis of value–for example, integrating two products to create a more holistic platform–you have to make every decision with that end goal in mind. If you start integration processes and don’t keep that “thread” going, you can botch the entire process.

The second is not looking for ways to unlock value. Matt explained a key advantage of two smaller companies coming together–or one larger company acquiring a smaller organization–is the opportunity for shared services. This takes away “low-leverage work” so specialists in both organizations can focus on creating and delivering more value.

“The executive team are really the ones that should be the stewards of that story the whole way through,” said Matt. “From conception of a thesis, to talking to a company to doing a deal, to the first 30, 60, 90 days of integration, to a longer-term value play. It should have the same thread the whole way through.”

Finally, Matt cautioned any tech company integration can fail if you don’t recognize your most valuable asset: the team. Since software is only as creative as the people who built it, they are ultimately the thing that will make an acquisition successful or a flop.

“The only way to make sure the value you start with is the value you end with is by working with the people you bring into the organization,” said Matt.

How to try really hard and succeed

Here are the action steps Matt recommended to get post-acquisition integration right.

Buy to do, not to own: Your acquisitions should have a purpose–either acceleration or adjacent growth–that connects to a value thesis. Matt shared the example of his North American organization acquiring a U.K.-based company. That acquisition was not simply about owning a new revenue stream but gaining a foothold in the U.K. more quickly than expanding the company from scratch.

Align around your whole organization, not the business you just bought: Matt said founders (and all the bankers, lawyers, and consultants they bring on) need to strategize around the new, broader organization. This doesn’t mean you ignore the needs of the organization you just acquired, but instead, look at how it fits in the overall big picture.

“The deal is an acceleration towards where you want to go as opposed to an end in and of itself,” said Matt.

Bring people along the change curve: Don’t forget you are ahead the most when it comes to understanding and being a champion of change. You need to bring people along with you, which Matt said starts with explaining what’s in it for them. From there, make sure you’re clear on three things: the value thesis, the benefits to all parties, and the combined or evolved vision of the newly merged organization.

Pay attention to your language: How you talk about the deal after it closes sends a strong signal to the new team. For example, Matt witnessed a post-acquisition integration that Invoca did shortly before he joined the organization. He later learned that Gregg Johnson, the CEO of Invoca, very consciously referred to both teams as “legacy.” One was “legacy” of the old company and the other was “legacy Invoca”–this choice of language clearly indicated he saw the whole team moving together as the new Invoca rather than the smaller company being absorbed by an existing team who may or may not welcome them.

“It really helped to break down this ‘us versus them’ thing,” said Matt. “It seems small, but I think it's one of those things where being thoughtful about culture all the way down to the language that we use when we talk to each other on a day-to-day basis has been really powerful.”

To hear Matt share more stories and tangible takeaways, grab your ticket to