I attended an Arbora-conference in Singapore in 2014 with our global partners and
listened to a key note speaker (PhD, practitioner-academic, Business Angel) on the
subject of ”What is the best fit between Investor and Investee Company?”.
One statement I remember so well was this: “If you are planning to sell your
company, start preparing for this five years before your target date. This will allow
you to be in the driver´s seat once you start looking for potential buyers of your
company. Buyers who are right for your company.”.
This was in 2014. The preparation work aiming for to sell HRM Partners/Arbora in
Finland began in 2015 and the company was sold in February 2020.
This turned out to be a very good advice. A business downturn in 2015 forced us to
act – with a sense of urgency actually. We had to downsize and scrutinize our service
offering, our processes, management and leadership. We selected a new CEO which
turned out to be the single most important decision we made on the board at that
This kind of process seldom runs exactly according to plan but you still need a vision
and goal to keep you going in the right direction. We were determined to get “back
on track” in terms of growth and profit. This took a couple of years and we started to
actively look for potential buyers of the company in late 2017. On the board we
called this silent process the “Tiger-process” (hence the final outcome, the Tiger
The good thing about this preparation phase was that we were not under any
pressure to sell. We felt we had the control over the process all the way. And what
was even better, the organization was not “disturbed” over the process but
continued as before to produce meaningful professional services and sustainable
During the two years we were involved in five serious negotiations with “groom
candidates”, one at a time. At the end three of the negotiations were ended by us
and in one case the “groom retreated”. The fifth candidate actually took the initiative
to contact us and turned out to be a very good match. The final buyer was Hanken &
SSE Executive Education which is a joint venture company between two Business
Schools, one in Helsinki and one in Stockholm.
About the Culture
So why did we say no to three potential candidates? It was not the price. The answer
is culture. Over 25 years of experience has shown us very clearly the importance of
culture especially in our type of business, the People Business. A positive and good
culture in a company – starting with good leadership – makes the organization
stretch through thick and thin. Through peak years and crisis. Academic research
shows that a good company culture fit is a critical success factor in mergers and
acquisitions. These silent forces of two companies can be crucial when integrating
In fact, the buyers were most interested in our company brand, reputation on the
market, customer base and strong experience-based expertise and culture. Price
negotiations came last in the process.
About the Price
Our board made a wise decision when it appointed one of our external board
members (not the majority shareholders) to conduct the actual price negotiations on
behalf of the owners. As we all know, owners, especially founders of a company,
tend to have an over-optimistic view of the financial value of their company.
As I write this text (October 2020) the most important phase of the sales process,
integration, is ongoing and will last until the end of 2020 (and beyond). There is a
strategy process, integration process, communication, communication,
communication, getting the two organizations to know each other and both
company´s offerings, harmonizing the management systems, organization and
working principles etc. And most important, secure customer relationships and
Then came Covid-19 (!?). Yes, there has been a lot this year for the two organizations
merging into one (legally by 1st January 2021). “We need to keep the eye on the ball”,
as our CEO said in March. And we did. We will end only some 15% behind originally
budgeted (in November 2019) yearly revenue.
The outcome of our Tiger leap is good. The buyer’s Chairman of the board described
the merger as “merger of equals”.
Personal Observations of M&A in general
Over the years I have many times watched M&A’s from a distance and always
wondered how little emphasis actually is put on the silent forces, people, values,
culture. Due diligence mostly concentrates on Euros and Dollars. Numbers are neatly
gathered in Excels, analyzed and iterated. Legal questions scrutinized.
The analysis of numbers and legal responsibilities and risks is of course important
from a finance, price and risk management point of view. But, this is looking
backwards. “Past figures are a bad prediction of future success” said professor Gary
Hamel, London Business School at Nordic Business Forum in Helsinki in 2018.
The future of the company lays in the people.
So, was our Tiger leap successful and good for all parties? This is what we believe
today after an integration process if roughly eight months. This is also what our
people and the customers of both companies say.
Maybe we are halfway through the integration-phase. Covid-19 did place an extra
burden on the business and the people this year.
by Staffan Kurtén, co-founder of HRM Partners (Arbora in Finland)
senior advisor and member of the board.