Leadership and Culture as Keys to Successful Acquisition
By Michael Durand, MBA, ATC
Growth through acquisition can prove to be a successful strategy. However, it is not without its challenges. In the growth of our organization, which has 13 locations, nearly half of our clinics were acquisitions and the rest were de novo. The success of our acquisitions is tied closely to the transition of leadership and culture. Highlighted below are acquisition scenarios that we experienced in our company’s growth. In each scenario, we had different leadership strategies in place to transfer our organization’s culture to the new acquisition.
“Acquisition A” was early in our history. The acquired clinic was a single owner and practitioner who had plans post-acquisition to focus on a related business outside of traditional physical therapy. The geography, patient demographics, physician referral base, and other considered factors all fit with our existing practice. A newly hired physical therapy manager replaced the former owner without overlap or transition. We failed to consider the leadership transition, which we could have implemented with the exiting owner. Also, the newly hired physical therapy manager was not fully ingrained in the culture of our organization. Because of these two factors, the acquisition was destined to fail, and we were forced us to close our doors within a few years.
Following the difficult lesson in acquisition A, we implemented a new strategy for acquisition B. A strong internal leader who was ingrained in the culture of our organization took over for the exiting owner who was bound to continue at the clinic for six months post-transition. Though we felt we were more prepared in this venture, we did not anticipate the impact and value of the exiting owner through the transition. The exiting owner did not fully support our organization’s culture with the remaining staff. The result was an “old guard versus new guard” clash, and, subsequently, many of the acquired clinic staff opted to move on. In the short term this was a challenge. Thankfully with strong leadership, a firm sense of the organization culture, and “new blood,” acquisition B has survived and thrived.
We ventured into a third acquisition—acquisition C—with experience. Throughout discussions with the current owner, we spoke frequently about the culture of our organization and our goals of incorporating our culture into their clinic during the transition. We were able to impart our organizational values and show the value of creating a unified leadership for the existing staff. For this acquisition, we not only had new leadership ingrained in our culture, but we also had a previous owner that “bought in” to the direction we were taking the clinic. Throughout the transition, both leaders were consistent in the message they delivered to staff. This consistency led to a successful transition, desired staff retention, and positioned the clinic for immediate growth.
Although there are several factors to consider when incorporating a growth strategy through acquisition, few are as critical to the success of these ventures as the leadership and culture transition.
Three valuable lessons we have learned through our acquisitions have been:
- A leader from within your organization must transfer your organization’s culture to the acquired location.
- Cooperative leadership between the acquiring organization and exiting ownership will lead to a smoother transition.
- Understanding and capitalizing on the value of the exiting owner, in combination with the energy and drive of the new leadership, will jumpstart the growth of the practice and create a successful acquisition.
Michael Durand, MBA, ATC, is director of business development at Physical Therapy & Sports Medicine Centers and managing partner of Strategic Therapy Partners. He can be reached at firstname.lastname@example.org.