Seventy to ninety percent of acquisitions fail to deliver their expected value.

A lot of people assume that happens because the buyer overpaid, missed something in diligence, or bought a weak business.

Sometimes that’s true.

But I’ve also seen buyers acquire healthy, cash-flowing companies and start damaging them within weeks of taking over.

Employees become uncertain about what’s changing, customers start feeling instability in the relationship, and new owners begin making operational changes before they fully understand why things were working in the first place. Before long, momentum starts quietly slipping.

As buyers, we spend so much time trying to figure out whether we should buy the business that we forget to think through how we’re actually going to step into it without disrupting what already works.

And that process starts long before the deal is done.

 

Start With the End in Mind

We don’t usually go into most endeavors thinking about the exit, but when it comes to buying a business, that’s exactly what you want to do. Even before I buy a business, I want a clear sense of how I’m going to exit it.

That doesn’t mean I know who’s going to buy the business or when, but it does mean I have a clear idea of the type of business I’m building toward over the next few to several years.

During the due diligence process, as yourself:

What would make this business more valuable three to five years from now?
What would make it easily transferable to a new owner and, therefore, easier to sell?

 

 

If you don’t think about that upfront, you end up operating reactively. You make decisions that feel right in the moment but don’t actually compound into value.

Either way, you’re building something in your business. The question is whether it’s something someone else will want to buy when you’re ready to exit.

 

Day One Is About People

Once the deal closes, the first priority is the team.

The very first thing I do is hold an all-hands meeting. I want everyone hearing directly from me what happened, why I bought the business, and how I’m thinking about it going forward.

People are trying to answer one question in their head: “What does this mean for me?”

That mental and emotional uncertainty can be a liability, so you want to get ahead of it as soon as possible.

Normally I’ll share why I liked the business enough to buy it in the first place, but I also make it clear that the company works because of the people already there. The systems and customers matter, but the people are the thing holding the operation together day-to-day.

Acquisition Lab co-founder Chelsea Wood put it perfectly:

The acquisition should feel like it’s happening with the employees, not to them.

The minute employees feel like a new owner is coming in to “fix” everything, they start wondering whether they still belong there. And once that uncertainty starts spreading through the company, you can create turnover in a business that was stable a week earlier.

 

 

You bought the business because it was working. The goal in the beginning is to preserve that, and that begins with the employees.

 

Protect the Revenue First

After the team, I focus on customers – specifically the ones that drive most of the revenue.

In a lot of small businesses, a relatively small number of customers account for the majority of the cash flow, and those are the relationships I want to get in front of immediately. My only goal with them is to reinforce continuity and understand what matters to them before something unintentionally breaks.

The order here matters.

You tell the employees first because if customers hear about the acquisition before the team does, they’re going to start calling employees looking for answers. That’s how confusion spreads.

Once the customers are handled, then you can start dealing with everyone else.

And everyone else will absolutely start calling.

The day you close, your phone will start ringing with suppliers, vendors, lenders, service providers, and people wanting meetings. They all want time and attention from the new owner, but remember that most of it can wait.

In the first couple of weeks, I’m focused almost entirely on employees and customers because those are the two things stabilizing the cash flow.

 

Build a 90-Day Plan

After the transition settles down a bit, I start focusing on the first 90 days.

Not a major strategic overhaul. Just getting clarity around the operation. People, processes, systems, cash flow, and a few practical early wins that make sense.

One thing I’ve learned: buyers dramatically overestimate how quickly they understand a business after closing.

You walk in and immediately start seeing inefficiencies: processes that seem outdated or manual approaches that could probably be streamlined.

It’s easy to start generating ideas and think, “This is the growth opportunity, and this is exactly what I’m here to fix.”

 

 

I write all of those ideas down, but I intentionally don’t act on most of them.

I tell people to carry around a notebook during those first few months and capture every observation without immediately implementing changes.

By the end of that 90-day period, you will realize a large percentage of your early ideas weren’t very good.

What looks nonsensical from the outside often has context behind it. There are customer expectations, operational constraints, employee dynamics, or historical reasons you simply don’t understand yet.

That only becomes clear once you’ve spent time inside the business.

 

Most Buyers Change Too Much, Too Fast

There’s a common piece of advice that says don’t change anything for a year. I don’t think that’s entirely right, but I also think a lot of buyers come in trying to prove themselves too quickly.

I’ve seen people buy companies and immediately start making major changes. In one case, it created a huge amount of value. In another, it completely damaged the business.

Same approach but completely different outcome. The difference was judgment.

 

Source: LinkedIn

 

Sometimes a business genuinely needs a major operational reset. More often, though, buyers are changing things before they understand why those things existed in the first place.

When you buy a successful company with employees, customers, vendors, and healthy cash flow, the last thing you should be thinking about on day one is how to overhaul everything. There’s a reason why it’s a cash flowing business to begin with!

Usually the better approach is smaller operational improvements after you’ve had time to observe patterns inside the business.

There’s a big difference between improving a business and destabilizing one.

 

Expect Some Friction

Lastly, expect a little friction once you take over.

Every company I’ve bought has seen some level of revenue decline in the first year after acquisition. Usually somewhere in the range of five to ten percent.

There are a lot of reasons for that.

Sometimes the seller was pushing hard leading up to the transaction. Sometimes the business needed reinvestment that had been deferred. Sometimes markets soften. Sometimes it’s simply the normal bumps in the road that come from changing ownership.

That doesn’t automatically mean something is wrong.

This is why I stress test every deal before I buy it. I want to know how much pressure the business can absorb before things actually become dangerous. And more often than not, stress testing the numbers actually makes me more comfortable buying the company, not less.

Most businesses can withstand more turbulence than first-time buyers think.

But only if you understand that possibility before you close.

Ready to acquire a business in the next 12 months? The Acquisition Lab is your first stop. Reach out to us today and get on the fast track to becoming an acquisition entrepreneur.