Intro

As an engineering leader you will occasionally be asked to take a look at a merger or acquisition opportunity. Industries and businesses have cycles of consolidation and occasionally you will find yourself asked to evaluate a Merger and/or an Acquisition. As a the technology leader in the conversation you will be required to weigh in on the engineering and product operations capability of the target company. Invariably you will focus on what we know as engineers, the code and architecture. But there is more to it than that. This series of blog posts is my guide to the other considerations, with contributions from colleagues current and past.

Thank you to all who have offered opinion and input to this. Please see it as a living document and comments/PRs are always welcome.

People

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Acquisition Motivations

When weighing the acquisition of another organisation, whatever the terms of the deal, we need to be cognisant of the motivating factors for the deal when weighing the technology and engineering behind the target company. Building yourself a weighting matrix seems to make sense when assessing overall viability of the whole merger or aquisition, but I leave that as an exercise for the reader. Here are a simplistic few to consider:

Acquihire?

The product and client base are not important. What you’re looking to buy is a team who have a certain skill set. In this case focus most of your effort on making sure that team is rock solid and that you have a great deal in place for them as individuals. As such please weigh the team composition aspects of the criterion below heavier than the product ones.

Customer base?

The product and the people are less important than the actual customer base they bring with them. When looking at this alternative, consider whether those clients can be directly ported over to your product, what that transition looks like and what backlog debt that imperfect transition (as it will almost certainly be) will bring. Weighing that more highly than staffing and product concerns makes sense in this case.

Product augmentation?

The product being considered would be a great augmentation for your current product set. This is probably the case that requires the most diligence as you or your organisation are going to be taking ownership of the product or company lock, stock and barrel.

Staffing

The success of software companies are a product of two things; the code they have written to date and the knowledge workers who have created that product.

Location

Do you have any constraints on where people who work for your organisation can be located? Some industries and client bases are regulated and/or have contractual obligations set that will constrain where your staff are based. For example, if you are meant to be GDPR compliant, I would’t recommend intending to have a bunch of devs in a non-compliant country. Even is this isn’t a compliance concern, ensuring a team is able to collaborate and function with the rest of the organisation largely depends on timezone compatibility. Having one part of the group in San Francisco, California and another in Stockholm, Sweden, is not going to be an easy recipe for success.

Team makeup

What is the makeup of the team? Are the mostly senior folks delivering some of the best product of their lives? Or are they a few lead folks vastly outnumbered by fresh grads and interns? The make up and dynamic of the team is an important consideration when looking to understand what your expectations are going forward and how you should be crafting integration and retention plans.

People debt

What did the team look like 3 months ago? 6 months ago? 9 months ago? A chief concern when examining how effective a dev team has evolved over time. A distressed organisation can do interesting things in order to manage cash flow and stay afloat while looking to be acquired. If the team composition has shifted significantly in the last while,

Staff disaffection

However awesome you think your company is, it is not the company that the acquired staff joined and have been part of for the last while. Your fight is not their fight and unless you can and until you do create a collective view of the world, it never will be. This is something key to understand otherwise you will potentially spend a lot of money and time on this M&A and the a key component of it, the IP in their heads, will walk out of the door.

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