The technology sector has become increasingly ripe for mergers and acquisitions (M&A) over the last few years, with 3,795 deals recorded in 2016 – the highest level recorded to date. Dell led the pack with the largest tech merger ever seen, acquiring EMC for $60billion. Analysts forecast that this trend will continue, with a particularly strong interest for companies operating in cloud, cyber security, Internet of Things, big data, analytics, gaming and connected cars likely in 2017.

The prospect of being acquired can be an exciting opportunity, but it can also present a number of challenges. Small business leaders who are open to mergers and acquisitions must ensure that they are not just an attractive target for acquisition, but are also well prepared to ensure that the process is successful.

Whilst tech SMEs shouldn’t be daunted by this, the key thing to remember is that an M&A doesn’t happen overnight and is a complex, time-consuming and stressful process for an organisation. If businesses aren’t well prepared for this transition, they can fail in ensuring a successful acquisition – especially if they anticipate a simple integration and make unrealistic cost assumptions.

To maximise these potential opportunities, small business leaders must ensure that they understand the process, their workforce is ready (and if not, they have a plan to prepare them) and that they have the required resource in place.

What is the process and how will it affect your workforce?

When preparing for a merger or acquisition, small business managers need to have a good understanding of what’s involved, so that they can take the right steps to ensure their workforce is in the best possible shape to withstand this difficult but exciting time of change.

M&A is a lengthy process, both before and after any official announcement is made. The first stage, ahead of the announcement, involves evaluating the strategic fit and the negotiating the M&A deal. Post-announcement, the second stage may include regulatory and shareholder approval processes, which can take several months to complete.

This period will not only require businesses to continue to conduct business as usual, but it is likely to increase the existing workload as the various departments and teams work together with regulators and integration/handover teams to complete the deal. SME leaders should therefore be mindful of the requirements for each of the stages and the amount of time and work it will take, to ensure a successful acquisition.

How can you prepare your workforce?

Getting your workforce well prepared for the complicated process and requirements of an acquisition is the key. Some of the main areas to focus on include:

• Compliance: During the transition phase, it’s important to ensure all compliance documentation is tracked and kept up-to-date across all areas of the business. This information will be crucial throughout the process.
• Policy: It’s important to take policies into consideration to ensure there’s consistency between the SME and the acquiring organisation. Having an understanding of how the policies will affect the business’ ability to generate efficiencies and deliver quality and value is necessary to avoid any complications.
• Data and viability: When two workforces merge, SMEs must keep up to date with the status of their employees to ensure a complete picture of who should be working for them at any given time.

Getting resources in place to manage the transition successfully

Ensuring all areas of your business are operating as usual whilst juggling the additional workload can be a daunting task for any SME employer. This will become even more apparent over the next year, with new and far reaching regulations such as the General Data Protection Regulation coming into force. Organisations of all sizes, including SMEs, will have to make sure that their compliance is up to standard.

In response to the additional workload required during the transition period, many tech SMEs going through a merger or acquisition are increasingly turning to experienced contractors to supplement their existing workforce. Hiring contractors can be beneficial in supporting your existing workforce with the increased workload throughout this time, as they can help manage work in the short-term. These individuals can also be helpful in supporting the development and upskilling of your existing employees, as well as advising them on the acquisition processes, due to their experience of having gone through similar procedures in other businesses.

This will also save businesses from taking on permanent head count that may no longer be necessary once the integration has been completed.

High levels of M&A activity looks set to continue in the technology sector and, as a result, SME leaders should start preparing now for the inevitable movement further down the line. Whilst much of this relies on assessing how they can maximise their position in the market, they should also ensure that their workforce is in the best shape possible to work through what can be an incredibly difficult but exciting time for the business.

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