Team Building in a newly Acquired Business…A Tale of Two Owners
by Christopher Mok
Linda, a diminutive and attractive Vietnamese woman came to me a few years ago looking to buy a business. “What is your motivation?” I asked. “My husband has been out of work for 9 months. In his last job, he was responsible for networking and operations of 200 computers for a growing technology company in Silicon Valley,” she explained. “I have experience in buying and growing business in the food industry. I am hoping to find a technology company for him to run and operate” she stated.
We finally found a software developer that wanted to sell off their technical support division. They had eight consultants that traveled to their clients place of business to provide networking and computer support. It looked like an ideal fit and after a smooth due diligence the transaction was consummated.
Linda’s introduced herself to the staff. “I have no experience in technology” she acknowledged. “I am depending on you to do your jobs, because technology is more foreign than English is to me! Danh (her husband) is going join your technical team. Our vision is to provide customers with serenity through excellent service with humility and integrity. Let me know how I can help you to in your job, whether it’s getting equipment, supplies, inventory or rescheduling appointments just let me know” Linda said in her staccato English.
Some interesting changes were implemented:
- Consultants no longer came to the Company office (there was none).
- Work was dispatched verbally. Client work & time sheets were turned in electronically.
- Every Friday the crew met at Linda & Danh’s house for a Company meeting & barbecue.
Sometime after the first anniversary of acquisition, I received a call from Linda. She said that she wanted to sell the business. “Why?” I asked. “I was hoping that Danh would run the business, but he just takes care of computers and not the employees or clients. I’m having to deal with this in addition to talking about technical issues that I don’t understand. I’m really stressed out! Help me please!” she pleaded.
Despite Linda’s anxieties and stress, the business was thriving. It didn’t take me long to find someone that wanted to take it off her hands. Harry had recently bought a company that provided training and possessed a library of technology products and programs. He felt that having system support capability would further separate himself from his competitors in addition to adding a new profit center.
Harry’s due diligence went smoothly but he was concerned that employees might leave. I explained that employees are not indentured servants and couldn’t be sold like equipment and other assets. Employment was at will for both the employer and employee. Harry made an offer conditioned on being able to talk with key employees. Linda accepted these terms, and after the interviews, the transaction was completed.
After the close of escrow, Harry introduced himself to the staff. He talked about his educational background, his career in stock market trading and about the other business he recently acquired that would add more work for this Company. He also came prepared with a 30 page employment contract for each of the employees that included restrictive covenants not to compete for a range of 50 miles and for 5 years. Harry expected everyone to sign the contract(s) that day. That didn’t happen…
Two of the top consultants refused to sign and quit immediately. Two consultants demanded salary increases to stay. Those that remained complained to each other about how oppressive working conditions were. Privately, the crew joked derisively about the new Company policies. It was no surprise to learn that the business closed down after nine months.
While the reasons for closure were varied, I’m sure that Harry’s autocratic attitude towards his employees was a major contributing factor. Reflecting upon this, I found it ironic that a woman with little formal education was more effective than her “successful” successor.