Acquisition: Keep the team and the company’s culture

About the expert:

Dainis Niedra is a professional betting and gambling manager. He has previously been the Director of an entertainment complex, organized various poker series and he was even the head of the Latvian poker federation. Currently, Dainis is Enlabs Managing Director of Center Eastern Europe (CEE).external linkExternal links are prohibited owns bookmaker Optibet, which is the largest betting operator in the Baltic States.

The things you can’t learn in a business school

I’ve already mentioned that merger and acquisition always have two objectives – synergy and economies of scale. It is very important that a company you purchase fits your development strategy or aids an area you are weak at, whatever that may be. It may be exposure to a new market, a new product, some new knowledge or the existing staff. It’s hard to find new employees sometimes. Purchasing a company gives you the chance to find dozens or perhaps hundreds of new skilled professionals who can help develop your existing business.

However, it’s important to remember that many positions are now duplicated in this scenario. No company needs two CEOs, two financial directors, or double the number of people who work in support. Especially if the market is the same, all this extra staffing should be reduced.

We’re currently in just this process of working with the staff. There were not a huge number of people in Global Gaming when we purchased it. The staff consisted of 80 employees. Now we have to assess whether our existing employees are weaker or those who work in the company that we’re purchasing. Sadly we’ll have to say goodbye to some people but we will be sure to pay all the compensations that are required by the law of the country where their contracts were signed. Those who stay with us will be integrated into the existing structure because processes are built in such a way that means they must conform to it. The new staff will have to do almost the same jobs day to day, they will just have to live by slightly different rules.

All top managers and the Heads of different departments work over the acquisition process. If we hire a team of SEO specialists from the company we purchase, the head of our SEO department interviews each one of them separately. It’s very important to understand from the beginning who is a weak link, who is a professional, who was tied to the framework of the previous corporate culture, and who wasn’t given a proper chance to grow.

A key point is that the employees of the company that is being purchased, currently lack motivation because they have a fear that they will soon be fired. They think that they are about to lose their jobs so they live in fear, and start looking for a new job.

At the first stage, I gave myself just one task. The task was to make that fear go away. I had to explain that we don't intend to fire everyone and hire new people. Our task is to make everything work, grow, and develop. If the people are not open to us then we either spend some time to get information, or we never receive the true thoughts. That’s why it’s so important to take away the fear during negotiations.

My strategy is to always speak the truth directly to new staff, no matter what it is. I never try to make things seem better than they are. I never try to intimidate. I start with a detailed story about myself and then I tell the candidates about our company and about the way we work. I speak like we were purchased instead of highlighting that we’ve purchased another company. I tend to be completely open and I tell the people to ask me questions if they have any.

People understand that we’re open to them and that the final decision is up to them alone. I make the first step, which is very important to the candidates. Of course, it’s good when you ask the right questions. Professionals appreciate the fact that you ask them about their skills. They understand that the final decision is going to be taken based on all of the information. Openness and an interest in finding the truth are endearing qualities. All professionals immediately take the side of those who work in this way.

The wrong thing to do is to make a zoom call for 5 minutes, ask people some general questions about them and their work only and then make a decision based upon shallow and emotional data.

It was easier for me because I have a pretty colourful background. I’ve also never interviewed people one on one, instead, I have always taken with me those who understand a particular area.

Heads of departments interview candidates by asking questions related to their specific area to understand quite how a person works. I ask more general questions (how the processes are built) and try to analyze people’s soft skills: the way they answer, the way they ask questions, the way they carry the conversation etc.

I wait for feedback from the heads of departments to understand the skill level of a particular specialist. If we don’t have a unanimous decision, then I try to understand why I see a person in a different way. The things may go differently in this case. Sometimes I defend a person. Sometimes I have to prove that we don’t need to work with a particular employee.

I can say that it is an incredibly interesting experience. You can’t learn it in a business school. Even in the most expensive one.

You learn how to see a complete picture and how to make decisions fast. You determine the people that you part ways with and those who will stay. You find solutions to restructure the company to keep the core structure on the place and maintain all the key employers.

You can’t be an aggressive capitalist that say something like “We’ve bought everyone, now you have to flatter and praise us” because it is an impossible way to carry out business. These people are professionals, and they will find another job easily if they don’t like the way we treat them. That’s why I believe that the main task is to keep what we’ve bought. Numbers and accounting reports give us the understanding of how big the business is, whether it is stagnating or developing, which regions are profitable, and which are not. However only once the deal is made can you learn how the people work, what they think, who they really are. You need to step away from the numbers and paperwork and keep the team and the culture. This is the main challenge, I guess.