52: What Happens After An Acquisition

all right here we go good afternoon everybody this is john barrows make it happen monday hopefully you're all having a fantastic monday here um and your weekend was good i had a pretty good weekend here uh my daughter i don't know if you saw my instagram post about my daughter finally learned how to ride her bike which was a nice little momentous uh occasion for a father-daughter type of thing which was fun and uh yeah the weather here in boston was fantastic but uh unfortunately the boston teams didn't do too well this weekend the bruins lost and the celtics lost so i'm a little bit annoyed about that but anyways um i was supposed to have a guest on today but i kind of fucked up the schedule um guests thought they were supposed to be on last week and uh i think they were supposed to be on this week so anyways we were going to reschedule that one so pulling a little bit of an audible today with that uh i'm going to talk about something i did a um post a little while ago on my my biggest learning lesson in my career uh from a business standpoint and then i wrote a long format blog post on a little while ago called the downside of an acquisition and so i figured because it was super popular got a lot of people talking and a lot of people asking me questions and being given really good feedback on it um i figured i'd use this as an opportunity to kind of go through that and and put it on the podcast so just like everything some people like to listen to it some people like to read it i'll also put the link to uh the article here in uh the facebook post uh you can also go find it if you're on the podcast listening to it later but the the whole premise here is and the background on this one is this you know i um when i was about you know i started my career and sales just kind of like everybody else fell into it i got my degree in marketing and then went through and got dewalt and black and decker and then xerox and then at around 25 years old my good friend chris merrill uh who i still work with today he started a company called thrive networks and this company was outsourced it services to the smd market and we were self-funded right so i jumped on board with him to help run sales and marketing i think i was the fifth person on board ultimately and um you know we were 25 so no idea what we were doing and then what happened was we scaled that company we become we were one of the fastest growing companies here in massachusetts for a few years in a row and then all of a sudden we started getting some interest from uh acquisitions right so the it space we did outsourced it services again to the smd market and you know it started to become an acquisition model for you know to consolidate all so we started getting some calls and we then got somebody to help us you know field all those calls and eventually my ceo uh just a good friend of mine jim lippy he ended up going to a networking event and bumping into a guy from staples and they started talking about a business partnership and then from there it turned into hey why don't you just buy us right and so staples was trying to get into the it services world and um i probably actually shouldn't be saying the names but fuck it uh so anyways they were trying to get into the it services world where because they knew like paper and pens and that type of stuff was was really on its way down and they didn't really have a lot of credibility in the it space at the time this was i don't know 10 15 years ago and um so they figured hey let's let's buy a company to help us get into that it services space so that we can start to evolve in that direction and it made all the sense in the world if you kind of thought about it from a big picture standpoint because we were a really good outsourced it services company with a scalable business model but we were self-funded didn't have a lot of money so scale was an issue for us whereas staples had all these target accounts for us i mean their exact target client was ours uh their icp was pretty much spot on point with ours and but they didn't have any outsourced it right so the idea is we're going to put our uh our services on their customers and we're going to make it rain so theoretically it sounded like a great idea and we were all pretty young i think we're all 26 27 28 years old so we had no idea what we were doing so as we were going through the evaluation process of this huge company i mean i think we were about 10 million dollars at the time revenue standpoint wise um and by the way for those of you who are listening and jumping on this live feel free to ask questions and i'll dive into anything that you want as usual but i figured this would be a good starting point but anyways um we didn't know what we were doing so so we brought a consultant in to kind of help guide us through what to expect when it came to an acquisition and i remember there was you know he came in and started talking to us about like look you're the executives are going to ask you questions the management level the director level uh mainly kind of the ownership right and obviously the executives and these are the type of questions that they're going to ask and these are the answers you should give and i remember listening to some of these answers going that's i don't feel real comfortable with that because i don't really believe that i was super nervous about i was i was excited about the acquisition or the potential of the acquisition but i was also super nervous about it because i'm like you know i've heard horror stories of of acquisitions and the company just acquires them and fires everybody and just takes their clients and so i'm like you know i definitely was apprehensive about it um but i was a minority shareholder i owned less than one percent of the company and so i you know i didn't want to cause any waves so i kind of went along with whatever we were supposed to do and i remember there's this guy and and jay baitler knows this i've written to him and i've and he knows about this so ron sergeant runs all worldwide sales or ran i'm sorry ran all worldwide it was the ceo of staples and then um jay baitler ran the contract division of staples which was a 12 billion dollar part of their organization i mean staples at the time is 20 billion uh um jay ran the 12 billion dollar part of it and that was the part that acquired us right so jay was now interviewing all of the executives at at my company thrive and it was a one-on-one interview well he had somebody else with him and i remember going into that interview and being like hey you know i'm super excited whatever and jay asked me so john what do you think about the acquisition like give me your thoughts on what you know what do you think good bad whatever and i and i told the company line you know i said exactly what i was supposed to say i was like oh we're all excited it's gonna be super great i can't wait you know uh super yeah it's just and i way overplayed my hand and for those of you who know me and have been following me um i'm a pretty bad liar because i'm about as direct as and transparent as it gets right i i suck at lying because i'm i don't know i just i'm not good at it and my i wear a lot of times my emotions on my sleeve and so when i gave him my answer he saw right through me right and even though i didn't know it i thought i played a pretty good role there uh he saw right through me and so afterwards my ceo sat down with him and said hey uh you know so what'd you think of my management team and my and jay was like oh it was you know great you got a really good strong team here you know i got one reservation and jay was good and uh jim was like what are you talking like who and he's like you know john john's the one i have a hard time with i'm like and and jim at the time was like what are you kidding me out of everybody who i would have expected you have a hard time with john was the least because he's the heart and soul of the company you know he bleeds blue i was the one who stood up every single week in your month and gave the rah-rah speech we got to keep doing this team you know that type of thing and he's like out of anybody i thought you'd have a hard hard time with i think john would be the last person and jay was like yeah so my ceo defended me you know he was like no we're holding on to john and again i didn't know any of this until he came and told me and then you know we so then they acquired us and i always felt like with jay specifically that if i had just grabbed a beer with him that you know that we would have been able to connect much much more directly right if i would just hey take the you know all the bullshit away unless you and i have a conversation i really felt like we would have been able to hit it off because we were very similar we were very direct and and um but my ceo kept protecting me right he was like no john you know and i'd say you can't talk to jay but i'd really recommend you don't because the fear was i would get in front of jay and i would say whatever was on my mind and i would take the filter off and it wouldn't go well and jay would fire me and then that would put us into a bad spot so you know so i didn't right i kind of played my role jim played the you know the person that really transitioned you know dealt with the transition and everything else and i was the one who you know was like all right let me just go execute let me just go execute on you know vpsl stuff that's what i did problem there was the perception of me was already set in the negative motion from the main guy who bought us right i wasn't doing myself any favors to to change that perception because again i'm not really a corporate guy i mean one of the reasons i live i work for myself is because i really you know the corporate culture of of uh the politics and all that stuff i've just never been able to figure that out i've never been able to figure out how not to take the filter off and play the game okay at least in the corporate world i like working with corporations but me in a corporation not so good so anyways i did my job and for the first six months i kind of put my head down and really tried to grind and make this work and whatever and it and it wasn't good the the acquisition uh did not go well as far as the integration specifically from the sales and marketing standpoint again on paper it made all the sense in the world for us to have this acquisition happen because again we were the it they had a scalable model and all this other stuff but one thing i've realized is that a lot of companies when they do evaluations of businesses they look at the finances they look at all these things but it's rare that i see them do the evaluation on the sales process and the integration of the sales teams and who they sell to and how they sell because if you think about it right we sold outsourced it services to the smb market and when you're talking outsourced it services at the time this was before cloud this was when it was on premise and servers and all this other stuff and we were managing infrastructure right service workstations backup security antivirus all that stuff so if we screwed up we could potentially put you out of business right so this wasn't just like this okay yeah no problem they sign up for it services see what happens so we sold a very very high value product to usually the senior executives ceos cfos within organizations and and it was based on value staples i mean they their their sales reps are taught to sell commodities to people who are taught to buy commodities for the most part i mean we actually went through a sales process with them before we got acquired and we had a rep come in and do a mock sales call the rep didn't know that we that thrive our company was was about to get acquired so we set it up where hey have um you know have your team come in have your best sales rep come in and sell us as a prospect right and like a legitimate prospect and this guy came in and he was a good sales rep but he defaulted always to hey why don't you give me your you know the past three months of bills we'll run them through our systems and and we'll show you how much we can save you right on your pens paper and all that other stuff and i kept trying to kind of lay give them layups like hey what about the um you know the the furniture i heard staples has furniture we might be moving here in a few in within the year like how do you do well i can introduce you my furniture rep okay well what about uh the the copy print services we outsource a lot of that stuff i heard you guys have a copy print yeah once you sign up well i'll introduce you to that rep that rep so there was no like there's no value play there was no like consultative sale or anything like that it was purely based on a commodity because that's who they were taught to sell to so it's no fault of their own everybody has different sales processes and some are better fits for others but now if you integrate those two sales models my job as a vp of sales was to now figure out how i can get a sales rep over at staples who was taught to uh buy commodities and i'm sorry taught to sell commodities to people who are taught to buy commodities trying to get them to level up a little bit and talk bigger picture on it which is scary for people that don't know technology like when i first started selling it i had i was scared to death about talking about it because i knew nothing about it so i was trying to get that rep to then start to make those introductions so say i found one of those reps right who was like yeah i could do this this is definitely something i can introduce to my clients well now they have to introduce you know it services to their main point of contact who's the office manager who's again taught to buy based on price and those type of things so now you say you have a great sales rep who's like yeah i see the value here and they happen to have a good relationship with a with a office manager who understands and can say yeah this kind of makes sense now that office manager has to bring that to the cfo or ceo and say hey by the way now staples can manage our it services and it was like i you know and if i'm a ceo standing there going and my my office manager comes to me and says yes staples can now manage our it services without having dialogue with that with that rep who can maybe articulate the value to me i'm a ceo i'm a cfo and like no way am i going to let staples touch my computer network right now right there's no that they're not even in that field so no go you know save 20 of my pens so that whole thing ended up being a disaster because i kept fighting the value fight of trying to do it and it just it just didn't work and probably a lot because i just didn't have the skill set to do it i've always said channel sales is probably one of my biggest challenges as a sales rep it's the one part of sales i have not been able to figure out you know i always say getting my own reps to sell my stuff um hard enough getting somebody else's reps to sell my stuff shit 10 times harder so just that alone you know a lot of failures on my part but what happened was about for about six months i was super optimistic this is a new challenge for me i'm i'm trying to learn new stuff and then all the time i started getting ornery because i was getting a lot of backlash of the lack of results and a lot of them were my fault but there was some other things that i just could not control and then i started reacting poorly right so i went from being very optimistic to being very pessimistic and you know i vividly remember uh for those of you who've seen the movie 300 right um about six months into the acquisition at staples and this is not in the in the blog post that i wrote it's about six months into that acquisition i remember sitting in my house with my 50 inch high def screen um stoned off my ass watching 300 and meant meant like at three o'clock in the morning and mentally thinking i'm leonitis and my little team sales team here at thrive is is the 300 and we're fighting the persians which staples and i remember i'm like i'm gonna win despite this right and as soon as that came that phrase that mentality came out of my mouth as far as i'm going to win and despite them i should have just i should have walked in and put in my resignation that day because we were we were now staples i couldn't let that go and i think that's a big learning lesson for a lot of people who get acquired you are no longer that company no matter how many times the acquiring company tells you oh we just bought you for you and we're just going to let you do your thing because that's why we acquired you you're no longer just that thing you are now part of a much bigger entity and you will eventually get consumed into the mothership or else it's just not going to work there has to be the integration right and so by me fighting it again i should have just at that point said i'm done but i was super stubborn and i kept going at it and even though i knew it was wrong i just kept going and fighting and fighting and fighting right so with that it got worse all right and uh yeah i'll answer some of these questions that are coming up but with that it just kept getting worse and eventually jay uh fired me now jim came my ceo came in i was i vividly remember it was the day before thanksgiving and he sat me down he goes john um staples wants to move in a different direction and i was like what and i will tell you it hit me like an absolute ton of bricks because i never really even considered anything else i was so all in on thrive that i never looked at a plan b i never considered getting fired i mean again i was one of the original people at the company you know i bled blue and so he was like and you know if they effectively he was saying they were going to offer me another position which was a a demotion and they were going to hire somebody above me and by the way for those of you out there listening to this if you ever see within your organization if there's ever a vp of anything specifically in my case a vp of sales and that gets the company to a certain level and then they hire an svp of sales that is the corporate nice way of firing the vp of sales without firing the vp of sales i see it all the time it's like oh you know i i did the grind work to get us to this level and they're like you know what john why don't you do this and we'll hire somebody who's kind of been there done that as the svp of sales that's they should just say john you're fired could you help with the transition so that's what they did and he said you know what john they're not looking to get you out immediately and i need you to stay on board so we can transition this because i don't want there to be just too much disruption within the business and so he's like look you know february so this is november he's like your last day is going to be end of february if you're okay with that and then you get some severance after that and i remember almost losing it right there and i left um i just left the office i couldn't focus obvious because this is the first time in my life i had been purely fired just fired from a job and i remember driving home and i had to pull over in the parking lot and i just lost it i ended up crying you know i was like i can't believe i actually called my buddy chris and was like dude this is what just happened you know what the fuck all this other shit right and i was devastated and i went home and i remember you know tell my wife and the girlfriend at the time and that wife and i was just like you know what the hell and it and it probably took me about really about three or four days to really come to grips with it again thank thankfully it was actually over i guess thankfully or not uh the people around me probably didn't thank you but but over the thanksgiving break it gave me four or five days to really digest it and and figure it out and i remember kind of waking up one day and being like you know what yeah i i'm almost glad that they pulled the trigger for me because i don't think i ever would have done it i would i would have buried this i would have gone until it was it was done um and i never really you know even though i knew it was wrong and so you know fast forward we transition i leave you know february comes and goes and then afterwards what i did and this is another big learning lesson this was where the biggest learning lesson came in my entire career he go um i reached out to jay baitler the guy who fired me and i said jay you know would you be open for my own personal and professional development would you be would you be open to just me taking an hour of your time and just ask you some questions about what happens so i can understand so i can just learn from this and get better and what's that it's called by the way as it relates to training it's called the uh the walk i'm sorry not the walk away close the uh the doorknob close or some people call it the colombo close which is after you lose a deal you you know that's the hard part though so the psychology around this is when somebody says sorry john we we're going in a different direction or we've gone with your competitor that was the hard part right when they told you that that was the anxiety part of them saying sorry we're not going with you and so now their guard's down a little bit and then when you come at them and you say hey what's the real reason we lost you know hey for my own personal professional what's the real reason because usually they'll tell you oh you're too expensive some surface level whatever just to make make you go away and then you say well you know what was the real reason and that's a lot of times where they'll tell you well you know what john there we had previous experience with them or you know they did this whatever my ceo just loved whatever it's like okay now the the sleazy sales rep approach to that closing technique if you will is is when they tell you that whatever whatever the real reason is then you spin it back on them and you're like oh no we can do that or whatever you try to resell it that's the dirtbag sales rep way of dealing with it i use the the doorknob close as really genuinely to understand what happened so even to this day if i lose a deal if it's a deal that i really thought i won because now 22 years of sales experience i got a pretty good threshold of where i think you know where i think i am with a situation and whether i'm going to win it or not and so if i lose one that i thought i was going to win i'll reach out to that client say hey for my own personal professional development could i just get 10 minutes of time just to understand what really happened here and i'd say probably one out of 10 clients says yes but man that the value that i get out of that one conversation is worth more than the commission would have been off that deal because i get deep insights and that can make it so that i can sell better moving forward right so that's what i did with jay and when i tell you he was more than enthusiastic he was he said absolutely first of all and then second of all when i showed up to his office he was like john barrows get in here and i'm like i was a little bit worried and he was like you know what before you even get started here one of the things i wanted to tell you was you know the fact that you reached out to me and asked for this feedback tells me more than more about you than i knew in the year of working together with you he's like one of my favorite things to do is mentor young leaders and all this other stuff so come in here you have an hour of my time you can ask me whatever question that you want and i treated it just like a meeting with a client so i prepped for it i had my questions and all this other stuff and i said jay i got 10 questions for you you can be as open and candid as you want or you don't have to answer them if you don't want to but i'd really appreciate it he said i will answer any question that you want and that was by far and way by the way the highest value it was the best hour of business i've ever spent it was my i got an mba in a box in that one hour and one of the things that really came out of it which again was the biggest learning lesson here was i said jay one of my questions was would you have been open to this conversation when i worked for you and he's like yeah well of course i would have why why do you think i wouldn't have been i was like well because i was kind of told that not to really reach out to you because you know i would have screwed things up and whatever and he looked at me and he said john what's the risk and i was like well the risk is i get fired man he goes well let me paint two scenarios for you he goes say you went over jim's head you had this conversation with me and i ripped you to shreds i i told you you suck you know i can't believe you did this and i ratted you out to jim and all that other stuff he goes would you have wanted to work for me after that i'm like no absolutely not he goes okay well so then do you think you probably would have made a choice a little bit sooner and um he would have gotten out of this on your terms instead of mine i'm like yeah probably and he's like okay now on the other hand say you came over and you went over jim's head you you and i had this conversation and it went really well he's like do you think the last year of your life would have been a little bit easier and would have been a little bit more enjoyable and productive like yeah definitely if we had a better relationship he's like okay then i'm gonna ask you again what's the risk and in that moment that changed my whole mentality on how i view things and and this is the learning lesson i used to have a you know i got my 12 guidelines to success and one of them used to be always have a plan b right and and i disagree with that now because if you have a plan b i think that actually detracts from your plan a right because now if you're like oh well if i didn't do that then okay at least i have this i don't think that's the case i don't think you should do that because i think you should be all in on your plan a but what i shifted it to is make sure you're okay with worst case scenario so this is my tip for everybody after this hour you know half hour here talking is is now the way i look at decisions any decision i make the quite i ask myself what's the worst case scenario here i.e what's the risk and if i'm okay with the worst case scenario i go ahead and i do it so for instance if say i'm dealing with something like my main point of contact in a deal and i have to go over their head because they're not the decision maker right and i know the vp of sales is and i've tried a couple of times to work with that person and i know that you know this my training is the right solution it's going to make a big difference for them and all that other stuff and i but they're just they're they're either too chicken or they won't do it or they're blocking me and i know i have to get up here i ask myself what's the risk if i go up there for the right reasons with a right with a good message the risk is i piss off the person i go over their head and i lose the deal as long as i'm okay with that i go ahead and i go and i do that okay um and you can apply this to almost anything you know what i mean so that's the really the way i've i've now lived my life is i ask myself what's the risk so just to summarize here you know the downside of an acquisition you can read that post because acquisitions aren't always good most of them are bad actually for the acquired company the acquiring company usually is in pretty good shape the acquired company uh keep an eye out for some pitfalls okay um and the other thing that i would just say is is be open and honest with everybody especially yourself when you're not feeling comfortable with something talk to people about it share your you know share a constructive feedback on where you are and be transparent about it and and be justified with your answers but you know don't hide it because if you hide it to get to a certain point you're eventually going to have to deal with it otherwise and that's probably going to end up biting you in the ass and it's going to end up being worse than if you address it up in the front and at the end of the day always ask for feedback um because you can we can always get better and i learn way more from my losses than i do from my from my wins and by the way jay baitler who's the guy who fired me uh fast forward a few years i had an opportunity to work for jack welsh ge jack welsh jack welsh so jack welsh and suzy welsh they started an online mba program called jwmi jack welsh management institute by the way if you're interested in an online mba i would highly recommend taking a look at that one but they were looking for a vp of sales to to help them get their online mba program off the ground and some recruiter found me who i was who i had done a favor for a long time ago and he was like john here's an opportunity and i got all the end of that interview i interviewed with jack directly i interviewed with suzy directly and they wanted references you know what reference i gave them jay the guy who fired me and you know what jay did when jack welsh called jay baitler he called him up and jay said if you don't hire john you're an idiot he's like john barrows is one of the best most you know promising young leaders i've come across in a long time and it was because of that meeting so i leave you with what's the risk ask yourself that question all right every time you make a decision ask really what's the risk and if you are okay with worst case worst case scenario make that decision all day every day all right um hit a couple of questions here uh what's the culture change as you went from thrive to thrive being acquired stable as the culture change was massive man i couldn't we went from this tiny little company that could make decisions in no time at all right i mean this is the way we worked from a marketing standpoint was i had this one kid mike platts who is you know pretty good at photoshop and we'd get in and we'd get all stoned and come up with like a marketing campaign and he would then photoshop it and literally be out the door by the next you know the next day whereas at staples all of a sudden 15 people were involved in it it took six months to get a campaign out there and it was just it was like we slammed into this brick wall and there was also our mentality of grinder self-funded go get it every one of my team worked their asses off when you get to a huge corporation there's people that just do their jobs and there's nothing wrong with that but there are people that literally just show up at nine o'clock and go home at five o'clock and that was as far away from our mentality as we could get and so me trying to get those kids to believe and do all this other stuff you know forget it um so there was a lot of cultural things and again selling a commodity versus selling value there was culture change there um i i was the vp of sales and any one of my reps could come and talk to me whereas at staples there's 45 layers of people to go through before you can get to you know somebody with power and that's where you know jay every time i had a conversation with jay we were spot on or you know and his leadership like we were pretty on point but then as it filtered down all the way to the ground floor i realized that unless thrive was a was something literally that they were being measured on my biggest recommendation on acquisitions is make sure that you get into the comp plan let's put it that way because i actually paid sales reps more to introduce me just introduce me literally pick up the phone and say would you take a call from our new partner thrive networks blah blah blah and if i would then run that entire sales cycle and close that deal the sales rep got paid more from me than they did if they had closed that deal on their own from a staple standpoint like selling them office supplies but because the check came from thrive and not staples and because it wasn't something their manager was sitting there saying where are you on your thrive quota and if you don't hit your thrive quota you're gonna get dinged reps are like yeah whatever like what am i actually going to be measured on that's what i'm going to sell everybody knows that right so that was a huge part of it um another question here was what was the most baller thing you did after being acquired tell the story about the celtics opener party oh that was baller yeah so in the minute left uh my one of my best negotiations ever we had uh barter deal with um with the celtics they were a client of thrive and this was when the celtics sucked i mean sucked so hard like we had four seats that were like awesome seats that was the barter and and uh it was brutal because they um you know i couldn't even give these seats away right i literally couldn't even drive people and pay for them to you know all their stuff and they were like i know i'm all set so then one year i came to the guy who i was negotiating like dude these seats it's just not working for us he was like all right well we'll give you the whole upper mezzanine area where it's like 200 tickets where you can throw a party for the opening day next year i'm like i guess and this was right around the time we got acquired i'm like okay so i shook his hand and the next day the celtics signed ray allen and then right after that they said they signed uh um kg who's my favorite best one of my favorite basketball players of all time and the celtics went from being the worst in the league to the best and i had tickets for home opener 200 seats of the mezzanine and it was insane so uh that actually went pretty well so anyways uh appreciate you guys listening in today i'm gonna bounce out i got a call here at one o'clock so um as always please keep asking questions uh for those of this though you don't know um you know join us on friday afternoons if you go to the facebook group the j barrows facebook group like it's just facebook slash j barrows and then you join the make it happen actually i'm sorry the facebook page and then you join the make it happen group there's a ton of interaction on that people ask great questions and a lot of people who have been um through my training and stuff like that are in there and they're answering questions and so are me and morgan and then friday afternoons from four to five we do a facebook live session like this and answer those questions and also it's kind of office hours so you can ask any question that you want so please join us on friday afternoons because we're having some fun with it and um and hopefully adding some value here so other than that you can hit me up on any other social channels as usual and uh make it a great week this week all right everybody we're uh coming towards the end of the month here hopefully you all have a good month set up and your summer's uh looking pretty solid as well but uh anything i can do to help make that month even better give me a buzz all right make it happen everybody thank you very much so so so so so so so so so you you you you you you you you you you you you you you you you