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United in Merger

Various northeast Wisconsin firms join forces and discuss what goes on behind the scene

Story by Lee Marie Reinsch

February 2018

When two companies join forces, it can be a little like early episodes of “The Brady Bunch.”

The three sons and three daughters from the newlywed Mike and Carol Brady’s respective first marriages wonder how they’re ever going to coexist in the Brady split-level. Carol’s three girls squabble among themselves; Mike’s three boys spar with each other. Factions team up against each other. And at some time or another, each of the six kids is sure their parents hate them.

As when two companies become one, the new whole goes through an adjustment period. Both parties investigate and appraise each other, doing their due diligence. With every change comes a learning curve, technical difficulties, trials and tribulations. Ideally, all live happily ever after.

Until the next episode.

As with getting married, principals decide for any of a number of reasons that their business will be better combined, so the entities come together. As with marriage, reasons, results and reactions from those in the inner circle vary. It’s seldom easy.

Here in northeast Wisconsin, some newlywed companies tell us why they got hitched and how they brought their business families together.

Fear of change

Any change on the horizon has the potential to send tummies into a tizzy. We’re habit-driven creatures.

“You take anyone aside and ask them to change their daily routine, you’ll get pushback,” said Jamie O’Brien, associate professor of business administration and management at the Donald J. Schneider School of Business and Economics at St. Norbert College in De Pere. “I think that spills over into the workplace in a merger situation, where you see people not wanting to change the way they’ve been doing things.”

The Brady boys surely wondered if their golden-haired invaders would tie up the bathroom, or if their new stepmother would quash their freedom. And Carol’s girls surely worried about what it would be like to have brothers.

Once people learn of a change, their minds go into overdrive: What’s going to happen with my job? What if they cut my pay, my retirement, my seniority?

“A merger can manifest itself in different ways,” O’Brien said. “You can have people showing up late for work because of stress. You can have people just saying, ‘I’m out of here.’”

People can refuse to do certain duties or even be upskilled. “It’s all symptoms of the underlying problem, which is fear of change in the first place,” he said.

The problem isn’t the merger, the acquisition, or the change in organizational culture, according to O’Brien. “The problem is the fear we have of the unknown, and the stress accompanying that.”

He said he thinks the field of change management – which he studies – is misnamed and would be better called ‘transition management.’

“People don’t mind the end change, but not so much the steps to get there – the transition,” he said. “It’s like the person trying to lose weight after Christmas – everyone wants that beach body, but the steps one to 20 aren’t always transferrant.”

Why better together?

Companies that join forces must derive some sort of benefit from doing so, since there’s no sign of it stopping. Increasing their client base, expanding service repertoire, and increasing revenue are just a few reasons these corporate couples tie the knot.

Linking up can add to a company’s capabilities. Consolidated Construction Company of Appleton found it was able to offer finish millwork and construction under one roof by adding Vincent Wood Works of Iowa in early 2017. Consolidated CEO Rick Bickert said the expanded service fit perfectly with its senior living and hospitality divisions, which demand cabinetry, finish millwork and buildout work.

“Putting those under one umbrella really made us,” Bickert said. “Our clients love our taking it off their hands, and our service goes up another level when we can coordinate that under us.”

Menasha Corp’s recent purchase of food packager ARI of Illinois enables it to do direct food-packaging of items such as cereal for wholesale clubs, according to Menasha Packaging Chief Operating Officer Mike Riegsecker.

“With e-commerce and changing retail landscapes, there’s going to be more (demand) to re-manipulate package sizes and customize,” he said.

Joining forces can be mutually beneficial for acquirer and acquiree. For law firm von Briesen & Roper, which has three offices in the Fox Valley, it means expanded client base, market share, expertise and the ability to cross-sell services it couldn’t before. von Briesen & Roper recently acquired two Milwaukee-based firms, bringing its total to 12 offices across three states.

“Some of these well-established Wisconsin law firms came at a time when specialization benefits them and their lawyers, and when continuing a smaller firm lacking the specialization of the larger firm made it more difficult for them to compete,” said Randall Crocker, president and CEO of von Briesen & Roper.

The benefit to the smaller firms is a profitable out: “They can wind down their affairs, distribute equity to the owners, and find a wonderful place, we hope, for their staff and employees,” Crocker said.

Bank First National’s purchase of Waupaca Bancorporation during 2017 will help grow its agricultural sector, according to Michael Dempsey, president of Bank First National.

“They’re also adding credibility in an adjacent county to us as the go-to bank in that county.”

Other acquisitive companies find strength in numbers: Van Horn Automotive Group of Plymouth bought three dealerships recently, one in Lomira and two in Iowa, bringing its total to 12. Becoming a group rather than just a string of dealerships gives it more heft in the marketplace, according to Ryan Thiel, marketing director for Van Horn.

“We’re backed by other locations, more resources and bigger inventory, so we can get cars there faster and fill up the lot quicker,” he said.

Thiel indicated the consortium has facilitated communication and cooperation between managers and corporate.

“We’ve taken on this culture of operating and sharing ideas, despite all the different brands we operate with in terms of their different processes, philosophies, customer service and marketing,” he said.

The role of culture

Consolidated Construction CEO Rick Bickert didn’t have to do much research to decide his company would benefit from taking Vincent Wood Works into its nest. Brian Vincent of Vincent Wood Works contracted with Consolidated for five years, and the two companies had a great relationship. Now renamed Vincent Interior Systems, it’s a division of Consolidated.

“Brian was a high-performing contractor. We knew he fit philosophically and culturally, how he thinks, how he believes in serving the client,” Bickert said. “He’s a real partnering, win-win person – which is how we move forward in our business.”

Decision-makers often overlook company chemistry, Bickert said. They often just look at numbers and dwell on increasing revenue or decreasing overhead by shedding redundant staff.

“They don’t look at it culturally, and that’s why companies fail,” Bickert said. “When you try to execute, operationalize and make decisions, it’s like you’re trying to drive on square wheels.”

Investors Community Bank of Manitowoc looked for commonalities in milieu when buying The Business Bank of Appleton two years ago.

“If the culture in an organization isn’t relatively consistent and defined, organizations aren’t going to be as successful as they could be,” said Tim Schneider, Investors Community Bank president.

He identified culture as paramount to success.

“Anytime you bring new people into an organization, the culture’s going to shift slightly and you’re going to have some changes, but you want cultures aligned before you move forward and say ‘Let’s marry,’” Schneider said.

Dating tips

During the courting process, when companies are getting to know each other, they might do well to follow good relationship advice: Always consider the other side.

“The thing to remember is that the other person’s win is just as important as mine – that’s the foundation,” Bickert said. “There’s a third way to do something that incorporates both wins. I’ve seen it too many times – it does work. Just going in with that attitude creates a tremendous amount of positive energy.”

The best way to start is to open one’s ears.

“You need to listen, listen, listen,” said Dempsey from Bank First. “You need to ask questions from different angles and approaches to determine what their needs are, where their values are and how they make decisions.”

Not everyone working on a decision process weighs each factor in the decision equally, Dempsey pointed out. Also consider how they take care of their customers and shareholders.

“Spending time socially can help in understanding where their values lie,” he said. “By the time you make a commitment, you want to be sure you want to do business with them and vice versa.”

Keeping everyone happy

A bad transition can affect the bottom line, and nobody wants that.

“Say one group of employees is used to a lot of transparency and they’re bought by a company that keeps all that info a little bit closer to their vest – it’s going to feel like there’s a vacuum of information,” said Stephen Utech, president and founder of Illumyx, a De Pere company that specializes in employer culture analytics.

“The employees are going to think, ‘Are they hiding something?’” Utech said. “People’s minds go a bit crazy, and they start getting paranoid. They don’t work as hard, they’re not as forthright and honest, and work can then feel difficult.”

The smart company gets out in front of the problem and says ‘Here’s how we’re different. Here’s how we’re similar. Here’s what you can expect,’ he said.

“It immediately reduces people’s anxiety and tension levels and helps them get through that stage of anger and frustration much faster,” Utech said. “The quicker you can help employees through that, the faster you can get them to accept that change.”

Bumps in the road

Weddings seldom go off without a hitch, and the same goes for mergers and acquisitions. Northeast Wisconsin companies found plenty of them.

For one thing, the due diligence process can be lengthy and patience-trying.

“You may find some things during the diligence that bring up some red flags,” said Schneider of Investors Bank. “You say no, we’re not interested, and you’ve spent a fair amount of time besides your day job of running a bank and your other responsibilities, only to get to a roadblock.”

Regulations can stand in the way of an acquisition. “There’s a whole litany of things you can run into,” Schneider said. “We try to vet some of those things on the front end to make sure we’re not going to be going down a rabbit hole.”

Even if red flags and regulations don’t pit themselves against a company, the logistics of the change itself can be trying.

“The displacement of the leadership that gets invested into the acquisition process is something we plan for but one of most challenging things we deal with,” said Bank First’s Dempsey.

His bank had a team of vital employees that spent six months on the transition. “They also had their day jobs to do, so they had to work with people on the inside of our legacy organization to make sure we not only managed without their full support, but that we succeeded despite having some key people focused elsewhere for six months,” Dempsey said.

Having a plan in place, being organized and having good people who are willing to work long hours can help minimize problems, he said. Communication doesn’t hurt, either.

“Anytime you bring two companies’ cultures together and you’re just learning about each other and how you go to market, it’s just making sure you’re connecting all the right people through both companies,” said Menasha Packaging’s Riegsecker. “It just takes some time to work through that.”

Riegsecker credited their temporary integration team with connecting the dots and helping the transition be successful.

For von Briesen & Roper, tallying more firms’ attorneys means the odds of a conflict of interest increase.

“As we continue to grow, we get clients who are averse to other clients and we just have to be transparent,” said Crocker. “We have to be transparent, talk to our clients about whether we can continue that representation, and secure waivers where appropriate. But if we deal with integrity and honesty, we’ve had no problems there.”

Technology provides a reliable supply of issues and conundrums. In the age of driverless cars, it’s almost reassuring that phones still go wonky. Bank First National found that out the hard way.

“The phone system in our new offices were acting funny – not in a funny way – right at the time when customers had the most questions and were calling the most,” Dempsey said. It was extremely frustrating at the time, but Dempsey said even frustrations can teach us something.

“It’s another opportunity to see how a team can work together in the face of adversity and sort out who picks up the slack,” he said.

Another roadblock that can befall a relationship is one or both parties not wanting to change. Power imbalances between old guard and new can make a difficult union even harder. Illumyx’s Utech said acknowledging strengths of both sides can go a long way toward constructing something better than either side was on its own.

“Once companies see ‘here’s how we’re similar, here’s how we’re different, here’s how your culture is working for you,’ I actually see a lot of openness for executives to say, ‘Maybe we need to look at blending our approaches,’” Utech said. “How do we take what’s really good about your organization and my organization and use this merger as a way to make both better?”

And that’s the way they all became The Brady Bunch. 

Lee Marie Reinsch of Green Bay worked 18 years at daily newspapers before launching her freelance business, edgewise, in 2007.