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Why global expansion relies on values that are close to home

As Exclusive Networks announces the acquisition of Veracomp to create a new region in Central and Eastern Europe, I wanted to take a moment to reflect on the opportunities for partners as well as the importance of a strong shared culture in achieving long-term value while remaining just as easy to do business with amid global expansion.

You hear a lot about ‘cultural fit’ in the context of M&A and it’s easy to be cynical about its relative importance compared to cold hard revenue figures and forecasts. But seeing many acquisitions up close, I’m more and more convinced that achieving cultural alignment between the two parties is just about as critical as it gets, and that Exclusive Networks’ insistence upon this when looking for potential acquisition targets has worked to our benefit time and time again.

This is because what you’re looking for in a successful acquisition is long-term value. Cultural values endure and can be a better indicator of future success than what the company achieved last year. More importantly, the extent of cultural as well as operational alignment will dictate how quickly and smoothly the integration process will go. People are ultimately what matters and they need to feel secure and positive about what comes next.

Failed acquisitions will have an extremely negative effect on a business – no two ways about it – and they always happen because the integration process hasn’t worked. This can damage the entire organisation, sometimes irreparably. Companies rarely die of starvation; they die of indigestion!

Creating successful continuity, post-acquisition, means finding an outfit with a near-exact cultural fit that has also been very successful in its own right. We believe we’ve found this in the case of Exclusive Networks’ latest acquisition: Veracomp, who have been expanding and growing strongly since the 90s. The acquisition creates so many great opportunities for our partners and sees us open up a whole new region for Central and Eastern Europe (CEE).

Veracomp also has a very similar business culture to ours, as well as a terrific track record. This culture encompasses everything from their high-level business model of relentless and innovative value creation right through to the can-do attitude and resourcefulness of individual employees.

Having made numerous such acquisitions over the years – always with an eye to identifying like-minded businesses with similar ‘DNA’ – we know how crucial this is to preserving and extending our own culture: L’Esprit Exclusive (“the Exclusive spirit”).

As I’ve argued in a previous blog, good leadership should provide local and regional teams with the optimum autonomy to take fast, effective action without reverting to internal approval structures unnecessarily. However, this arms-length approach has to be balanced with the need to assure consistent standards and back-office processes across a global organisation.

In the case of a new acquisition, like Veracomp, which represents not only a new integration journey but also a whole new region within our EMEA group, achieving this balance comes down to culture. Veracomp has been highly successful throughout CEE, so there is no impetus for us to start changing things. At the same time, we are building an even larger global proposition that our customers and partners expect our new CEE region to be a seamless part of.

Operating in such a way demands leadership and professionalism at all levels, but also a shared entrepreneurial spirit. There is room for risk. Opportunities need to be grasped, not simply ‘processed’. And it’s a great feeling when you work with new colleagues who understand those values and buy into that culture.

This is very important in distribution where larger-sized businesses are typically characterised by bureaucracy, hierarchies, suffocating conservatism and institutional fat. But we believe that global scale can be sustained while staying true to dynamic, proactive and value-creating principles. Achieving this hinges on having a strong culture, and one that isn’t simply an internal rallying point for your staff, but that transcends all business operations and processes and delivers tangible value to customers and partners.

Finally, let’s not forget this is a two-way street and good cultures always encourage evolution and innovation within the parameters of unchanging values. As we’ve seen with similar acquisitions, the strength of regional cultures contributes to the global whole.

So I’m looking forward to seeing what we can learn from new colleagues in CEE, at least as much as seeing them understand the journey and mission of Exclusive Networks, and the importance of L’Esprit. And I’m especially looking forward to meeting and learning from new partners and vendors who have come to us for the first time via Veracomp – you are all welcome in the Exclusive family!

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