If you've ever thought about buying another company, you've probably felt two things at once. Excitement about what it could do for your business. And a nagging worry about everything that could go wrong.
Jody Williams knows both feelings well. Jody has been part of CFMA in Southwest Virginia since the beginning and spent years as CFO of Skyline Roofing, guiding the company through a stretch of strong growth. That growth included buying a local competitor.
Then the tables turned. A private equity-backed company purchased Skyline, and Jody stayed on for about nine months to help with the transition. Today Jody is with Case Floors, based in South Carolina.
Few finance leaders get to see an acquisition from both sides of the table. Jody has, and the lesson from both is the same: the deal lives or dies on culture.
On October 20, at the CFMA Virginia conference in Roanoke, Jody takes the stage with a session titled Growth Through Acquisition. It tackles a hard truth: 75 to 80% of acquisitions fail to deliver the value the buyer expected. The session focuses on how to put the odds back in your favor.
While at the conference, Caroline Raffetto, editor of Constructionowners.com, sat down with Jody for a live, in-person episode of COP Pod to talk through what makes a deal work, and what quietly sinks one.
Caroline: First of all, who are you, and what are you doing here?
Jody Williams: I have a bit of an interesting story. I've been part of CFMA here in Southwest Virginia since the beginning. I was the CFO of Skyline Roofing, and we had a lot of success and growth there. Then a private equity-backed company purchased us. After about nine months of helping that organization, I moved on to a new opportunity. I'm now with Case Floors, based in South Carolina.
Caroline: Your session is on growth through acquisition, and I'm sure a lot of that insight comes from personal experience. Tell me more about what you're covering.
Jody Williams:: Acquisition can be scary for a small business. If you look at the statistics, 75 to 80% fail to deliver the value the company expected. I want to talk about how you can put the odds in your favor and take away some of the unknowns.
It can be a strong strategy if a company has a strong balance sheet and a clear reason to buy. It's not reactive. Then you go out and find a good partner that fits culturally, because that is the key.
Culture creates value. So many companies miss that. They buy someone thinking they'll get all this value, but the culture never fits, and the value never materializes.
Caroline: Culture is so important, especially during a growth period. Maintaining it through an acquisition is tricky.
Jody Williams:: It is. A lot of it comes down to due diligence. What's driving the company you're targeting? Who are the key players? Are they the type of people who would consider joining another team?
When you get to the point of meeting with team members, have a plan for compensation and a plan for the fears. When a company is bought, employees get scared. If you want to keep that culture, you have to be able to walk in and say, "I know this can be scary for you, but we don't want you to go anywhere. We're doing this because of you and the rest of your teammates."
Have the details handled before you get there. Make arrangements so they have insurance on day one and can join the 401(k) on day one instead of waiting. Work with your partners beforehand so the acquisition goes smoothly. Everyone comes on, and they're happy.
We did that at Skyline Roofing. We bought a local competitor and didn't lose a single employee to a competitor for the first 12 months. After that, we had a retirement, an illness, and one person who left for another company. Losing only three employees in 18 months is fantastic. That culture drove so much growth and really helped transform the organization.
Caroline: Let's flip to the company doing the acquiring. Put the money aside. What are the benefits?
Jody Williams:: In the good acquisitions I've been part of, and I've been part of both, one benefit is intellectual property you don't have. The kind that's the future of the industry.
Another is geographic expansion. When you move into a new area, nobody knows you. Your brand isn't known, especially if you're a small local company, so starting up is expensive and high risk. It can be a lot more beneficial to find someone local who already has the infrastructure, the customers, and the marketing. If they're a good partner after due diligence, that can hyper-extend your growth.
You go from fighting to get your name known to "Oh, we know these guys."
Caroline: Let's Sparknote it, because we could go for hours. Quick advice for companies being acquired and companies doing the acquiring.
Jody Williams:: If you're acquiring, culture is key. In due diligence, know all the financials and look for hidden surprises. Once you're sure there are no gotchas, focus on the people and the culture. Is it a fit?
If you're being purchased, look at the acquirer. If it's a local or family-run company, I rest a little easier. Private equity is buying a lot of companies in construction. Not all of them, but often their motivation is very different from a privately held company's. It can be purely financial, and that can lead to decisions like cutting people. It makes sense on the spreadsheet, but not when you really look at the organization. Those make me more nervous.
Systems are a huge thing, too. If you're the acquirer, what system does the company you're buying use? How much work will it take to get their accounting system talking to yours? What outside partners do you need? Rarely does a small local company have that talent in-house, so you'll have to hire someone. What does that cost, and how long will it take? Those things can catch you off guard.
Then there are benefits. You sit down and find out they get four weeks of vacation, and you only give two. Some of their people may earn more than your guy who's been with you for 10 years. That's not fair. And as much as we like to think compensation stays quiet, it doesn't. It gets out.
Do the right thing for the people you already have on your team. They're the ones who got you to the point where you can afford to buy someone. Treat them right.
Caroline: We're talking about buying and money, but the biggest thing I've heard you mention is people. Our industry is so people-centric. Hearing you come at it from the angle of culture is amazing.
Jody Williams:: I truly believe culture makes the deal work. If the culture doesn't work, no matter what your spreadsheet says you'll make, it will not materialize. I guarantee it. In our business, it's the people in the field, the people doing the hard work every day, who drive everything. You need to make sure you have the right people when you're buying.
Most acquisitions don't fail on paper. They fail after closing, when the people who made the target company worth buying start walking out the door. Jody's point is that the spreadsheet can only promise value. The people deliver it.
That's why the work starts long before the deal closes. If you're buying, get the financials clean first, then shift your attention to the people. Find out who the key players are, what drives the team, and whether they'd want to be part of yours. Check whether your systems can actually talk to each other, and budget for the outside help it will take.
Then plan for day one. Have insurance and 401(k) eligibility ready on day one, not after a waiting period. Walk in with a clear message: we want you here. At Skyline Roofing, that approach meant zero employees lost to a competitor in the first year.
And don't forget the team you already have. Line up benefits and pay on both sides before someone else does the math for you. Your current people got you to the point where you could afford to grow. Treat them right.
If you're the one being acquired, know your buyer. Ask why they want you and what they plan to do with your people. Then decide whether that's a team you want to join.
Jody Williams is the CFO at Case Floors and the former CFO of Skyline Roofing. A longtime CFMA member in Southwest Virginia, Jody speaks on acquisitions, growth strategy, and building the culture that makes a deal pay off.
