Inarticulate ramblings of a management consultant

the day to day experiences of a consultant operating in weird and wonderful client situations

Due diligence in an emerging market – the management interviews – lots of communication, perhaps less understanding!

Family business part 2

Last week I explored the challenges of doing diligence on a fictitious family owned business based in Indonesia, from the perspective of the CEO (the link is here if you missed it). This week, let’s have a playful look at the next stage in the process…the management interviews, again from the perspective of the CEO of the business being acquired. This is the accumulation of a number of my experiences in and around SE Asia. Indonesia is the example market, but as one of your comments suggested, it is applicable to many other markets as well.

It has been written in the first person. Imagine yourselves in the shoes of the CEO of the business being acquired.

Context

I’ve just been informed by one of the advisers (based in Singapore but speaks Indonesian…young, smart but not lived in Indonesia for 10 years) that the acquirer is coming down for 2 days and wants to meet everyone in leadership roles.

It looks like a really formal process…the adviser has written a bunch of powerpoint slides for us to present and then there are the one to one sessions where each function presents their own area.

The process has caused panic with many people down here:

  • The family. Their involvement in the business has waned over the past few years but they still occupy a number of board level positions which seems to suggest to the leadership of the acquirer that they are major decision makers. Even the advisers (who’ve spent the last 6 weeks looking at every part of the business through the diligence process) don’t seem to understand this.
    •  I have reached some kind of agreement where the key members of the family will top and tail the two days. There’s lots of risk though…one of them in particular is completely uncontrollable in terms of what he says, and probably more importantly, how long he speaks for. There’ve been times where he’s just rambled on and on, but you cannot cut him off…just not possible in this organisation. So I’ve reached agreement on the schedule, so that lunch follows his ‘introduction’. That way we can manage the rest of the day.
  • The other people in ‘management’. Let’s be honest, there are some really smart people in this company but most of them don’t sit in leadership roles: the engineer who can fix just about anything and kept this business going when we couldn’t get any spare parts from our overseas suppliers for 6 months: the IT guy who knows how to hold together an disparate bunch of systems: the sales person who knows pretty much everything about every one of our customers; the designer who can pick up a concept and create something practical and ‘doable’ over a weekend!

The weird thing is that the acquirer doesn’t want to meet these people…they want to meet a bunch of people who are close to retirement and we’ve moved into leadership roles to ease them out of the organisation!

  • Some of them are ok…the old operations lead is good and keeps his hand in. He’s likely to turn up in his overalls though and most importantly, he doesn’t speak English at all well.
  • The HR person. Let’s be honest, she is an admin person who deals with payroll and acts as the sounding board for the employees. She was the owner’s secretary for 20 years and knows everything about the business from its inception until now. They’ve (the advisers) asked her to talk about our HR Strategy? Frankly, she’s terrified…and so am I. I’m trying to negotiate it back to a Q&A session. She also doesn’t speak English especially well.
  • Procurement. Even I don’t’ have any great oversight over this area. It’s been run by the same person, a family member for 15 years. There are no processes, policies, audit trail. We’re desperately trying to create some structure here so it doesn’t look like a function without any governance. His interest is completely aligned with the rest of ours..but it may not look like that from the outside. He may or may not turn up…and there’s absolutely nothing I can do about that!

Sharing of strategy

We’ve agreed that, in the interests of good communication / sharing, the CEO for the region from the acquirer is going to share some information on them as well. It’s a good idea but having seen the slide pack, I’m worried…for a bunch of reasons:

  • It starts with some kind of a promotional video…which was written for the Malaysian market! Good, that the language is close…not good, that it’s obviously not for Indonesia and to be honest, the market is really different. I’m pretty relaxed about this but the team?
  • He then wants to talk about the size, scale, products, research and development, technical capabilities of his global business. Very impressive but frankly he might as well be talking about a different planet! What the team wants to hear(despite all my re-assurances) is are they going to have a job, the same pay and, most importantly, can they continue to do what they’re doing at the moment. They will not hear anything until they have some comfort on that.
  • I finally got hold him a few days to discuss this…he was at the airport in Seoul. I didn’t want to confront him and I’m not sure he quite understood what I meant! We’ve agreed Q&As at the end of his session but no-one’s going to ask anything…maybe I need to ask those difficult questions….but how will that make me look?

We’ve hired some translators at enormous expense, again on the recommendation from one of the advisers. The trouble is they don’t understand what we do at all….so quite what they’re going to say is a mystery. I’m going to have to stay in the session and use my limited English to make sure that what they say makes sense.

Categories: Corporate Culture, due diligence, emerging markets, Family owned businesses, Functional Leadership, Indonesia, Mergers & acquisitions, post acquisition integration, Post merger integration

Tags: , , , , , , , , , , , ,

10 replies

  1. This sounds like one for the books. Another classic case of communication ‘nose bleed’.

    Like

  2. Thanks Ben! Fun reading.So do we get to hear the next installment?

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  3. Biz read written like a james bond film!

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  4. You put risk into a different perspective. I enjoy your blog and comments.

    Like

Trackbacks

  1. An acquisition in an emerging market from the perspective of the acquired CEO – two steps forward? | Inarticulate ramblings of a management consultant
  2. Acquisition in an emerging market – integrating the ‘ways of working’ – an exercise in futility? | Inarticulate ramblings of a management consultant

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