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Think of a vendor company as of a butler or a housekeeper. They spend years keeping the household running, know all the nooks and crannies in the house, the staff, and how to manage them. Same with vendors: they know the project like no one else. Their expertise can be pivotal for the acquisition’s success, and that’s why it is sensible to think twice before replacing the vendor with a new team. 

In this article, we discuss the tasks that acquirers face at post-acquisition stage, how keeping vendors gives you a competitive edge, and share advice from our experience.

What is the post-acquisition life of the project?

After one company has bought another, a post-acquisition process begins. During this stage, the acquirer (you?) has a lot on their plate.

What are the main tasks of the post-acquisition stage?

  • Assessing resources, processes, and products
  • Integrating processes, resources, and projects
  • Rebuilding the company’s structure

The vendor of the acquired company’s product can play a key role in accomplishing these tasks.

Why saving a vendor is a wise choice

  • Establish processes quickly. An experienced vendor can give you a hand with that, as they know how to navigate the project waters. 
  • Save the knowledge. Over the time that the vendor spends working on a project, their team learns a lot about the product and uses the acquired information to make the best decisions possible. 
  • Keep pace. A new team will have to spend much time getting into the project details, while they could have been releasing new product versions instead. 
  • Integrate platforms successfully. If you’re lucky to have a team that has been working on a platform for quite a while and knows it to the detail, including its weak spots, it’s a win. By keeping such a vendor, you’ll be able to speed up the workflow and avoid the possible pitfalls.
  • Keep cybersecurity intact. It’s imperative that your vendor takes the service or product security seriously. Moreover, your vendor should ensure multi-level protection during the development process and at all levels in their organization. If the vendor provides according to your standards, keep it and avoid a security gap which otherwise would have happened during a transition.

The result of the acquisition should be mainly success and increasing profits. From what we mention above, you can see that the acquired company is more likely to go through this difficult period quickly and easily if the vendor (a qualified, experienced and reliable one) is not rejected at this stage. 

As a vendor, below, we share some additional advice with acquirers.

Make your innovation happen with our expertise in Wealthtech.

What to consider before making a decision 

  1. Even if you choose to close the project, migrating clients from one system to another most likely will be the vendor’s task, for the transition to be quick and smooth. They know how the product or service works, sometimes better than the acquired company. 
  2. If you decide to terminate the contract with the vendors, it seems logical that they should transfer all the information to you—however, sometimes it might be a problem. To prepare for that scenario, create a plan of the knowledge transfer, stick to it, and act methodically.

Say, the transfer occurs and you have all the cards, including the source code. In this case, you will need to spend time and resources educating your development team on all the nuances of the platform. Entities used, data flow, database structure, app architecture, third-party integrations, business processes, and user flow—these and other pieces of knowledge need to be transferred to a new team should the vendor leave the project. Otherwise, you may lose clients, destroy data, or spend months studying the code.

  1. Consider that some vendor people can start leaving the project before the closing process is completed. This may result in the drain of the much-needed at post-acquisition stage expertise and a lack of hands to keep the project running. One way to prevent this is raising the price the vendor charges and (or) assisting in finding another project for the team to avoid downtime.
  2. Too haste and numerous changes to the product can turn off the customers. Vendors working on the project know where to add and where to cut, so they can suggest the best course of action to make a successful fresh start or integrate products.

A case: After one of the companies we work with was acquired, together with the acquirer they decided to merge databases. We as a vendor closely cooperated with the development team of the acquirer. As a result, the work was completed even faster than expected, because both teams knew their projects perfectly and the internal and external cooperation was seamless.

Make your innovation happen with our expertise in Wealthtech.

Bottom line

Having worked on the project for years, the vendor has most likely accumulated significant knowledge on the technical side of the product. Whether the acquirer decides to halt work on the product, integrate it into its own platform, or continue its development as a separate project, the vendor’s knowledge and expertise will be invaluable. 

One hasty decision can put the whole acquisition at risk if you cut off an essential part of the project. Make sure you consider all the risks and opportunities.

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