Tips for Evaluating and Profiting From Acquistions
PE: Upon acquiring another publisher, how do you determine which resources (e.g., publishers, salespeople, production, technology, editorial staff) to keep in tact from the acquired company?
Goldstone: What I always say is, “The easy part of doing the deal is writing the check. The toughest part is integrating the business effectively.” So once we have agreed on a contract, then we go into full-fledged due diligence, where we assess all of the key employees that they have. We determine what the cultural fit would be with their employee base. The thing that we’re most concerned about is not compromising the customer relationships, whether that be on the editorial side or on the sales side. So, given the fact that we’re paying fair market price for a business, we don’t want to hurt our investment in any way by … not assessing the key people accurately enough. So we spend a lot of time in each of the functional areas identifying the strengths and weaknesses of the seller’s operation. And then we make a determination about who’s necessary to keep and what job functions we can fulfill from our standpoint.
PE: What one piece of advice would you offer to other B-to-B publishers on the lookout for acquisitions for their own companies?
Goldstone: I think the best advice would be to always look for properties that not only deliver the type of financial results you’re looking for, but also have the dominant share-of-mind proposition you’re looking for. Meaning, if you’re going to buy a company, it’s probably because you want to jump into a market … and you want to make sure that you’re acquiring a leading brand in that arena that has dominant share of mind and the right kind of credibility.