As co-founder and president, Ken Holsclaw's goal for Phase 3 has always been to provide clients with complete marketing solutions, from ideation to execution, in-house under one roof. Over the last twenty-plus years, he has accomplished this goal, in part, through a smart business acquisition strategy that is both art and science.
Phase 3's most recent acquisition was Dallas-based Technology Media Group, Inc. (TMG). TMG's capabilities have enhanced Phase 3's fabrication, embroidery, and branded merchandise product offerings. The TMG acquisition has also strengthened Phase 3's vertical services to include commercial architectural outdoor signage. We are proud to announce that Technology Media Group is now fully integrated into the Phase 3 family after a fabulous start in March of this year.
We asked Ken about his take on what makes for a good acquisition. Here’s what he had to say.
A: Not always. An acquisition is a corporate transaction where one company purchases a controlling interest or all of another company's shares or assets with the goal of assuming control of its operations. The acquiring company may then integrate the acquired company into its operations or allow it to operate independently as a subsidiary.
Integration can be tricky because it involves folding an existing company into another company, including assets, staff, processes, systems, and culture. It is important to take the time to plan and execute the necessary steps for a smooth integration and therefore maximize the value of the acquisition.
Over the years, I’ve learned many lessons on how best to acquire and integrate a business into our company. We have developed a deliberate process for integration that accounts for the needs of both Phase 3 and the acquired company. This process helps to smooth the transition and sets the emerging company up for success.
A: Acquiring a new company can serve various strategic purposes. Here are some of the reasons we’ve had for pursuing acquisitions:
A: For each acquisition we contemplate, we carefully evaluate the opportunity in the context of our overall business strategy, long-term goals, and the specific opportunities presented. There are four key considerations we focus on to ensure a successful acquisition.
A: When acquiring a company, there are both risks and rewards in deciding if the owner of the acquired company will stay on as an employee.
In some cases, the owner's contacts, expertise, or knowledge is the primary reason for the acquisition, so it's critical that the owner stays on for an extended period. If this is the case, we have extensive discussions with the owner about their willingness to work within the new structure and accept that they are no longer in charge. The owner must be fully bought into the integration strategy and process.
If the owner does not want to stay with the new company, we transition the owner out as soon as possible. The longer that owner stays, the more confusing and upsetting it can be for employees and the more costly it’ll be for us. Keeping an owner on just for the integration process is rarely helpful. Instead, we look for a “new pilot” within the executive team to lead the company through the integration.
A: As we begin the integration process, the timeline is critical to success. We’ve found that the quicker we integrate, the less costly and disruptive. A lengthy integration process does not bode well for the buying company, the selling company or any of the employees involved. It is important to have a methodical and deliberate process in place to achieve an efficient integration.
The one thing I always keep in mind during an acquisition is to expect the unexpected. No matter how detailed our plan is or how much due diligence we did, something unexpected always happens. It’s important to be nimble, address unexpected occurrences immediately and to always keep moving forward.
Ken believes the secret to a successful business acquisition is strategic and creative planning (the art) and methodical execution (the science). He's learned this through more than 20 years of running Phase 3 and 11 successful industry-related acquisitions.