Buy & Build Strategy: An interview with Jos van Loo, CEO at Oxyma
Oxyma is a Netherlands-based performance marketing agency that sold a majority stake to the private equity firm Nordian Capital in 2015 to facilitate a buy and build strategy, and completed three acquisitions in total as part of their expansion strategy. In 2017, Oxyma Group was acquired by Merkle (Dentsu Aegis Network). We caught up with Jos van Loo, the CEO of Oxyma after the deal closed, to find out more.
Why did you decide to do a deal with Nordian Capital rather than growing independently?
The market was evolving very quickly, and we knew we had to move swiftly to take advantage of the opportunities. We did our first acquisition in 2013, but realised that we needed help to accelerate the pace. The deal with Nordian provided the required funds for acquisitions and also enabled us as shareholders to take more risk in building the business.
How did Nordian help with your acquisition strategy?
Nordian helped in two main areas. First, the deal structure and their expertise enabled us to create a meaningful incentive scheme for key employees, existing and new, so that everyone’s objectives were aligned with the performance of the company.
Second, they helped us improve our finance and reporting structures to a more professional level, which was a key element in helping us have the rigour and professionalism required to become part of a strategic buyer.
What drove your strategic M&A choices?
We had three key criteria. The first was finding complementary capabilities and skills. Our strategy was not about buying more scale in our core area, it was about finding these complementary skills (in our case we were looking for online and social to complement our CRM expertise).
The second was size. We wanted to acquire companies that were large enough to move the needle for us and have some structure and process in place, but not too large to be unmanageable.
The third criteria was finding entrepreneurial teams, who had the ambition to continue to grow their businesses as part of the Oxyma Group.
What were the main lessons you learned about integrating cultures/talent?
When it comes to culture, it’s important to recognise that the culture will inevitably change post-deal and to tackle that head on and make this a positive. Creating a new culture post-deal, combining the best of both the buyer’s and the target’s DNA, is far better than trying to blend the existing cultures. This takes tremendous effort and you need to put a team in place to focus on culture and integration.
The other main lesson we learned was the importance of bringing some of the target’s key people into the combined leadership team; this ensures everyone feels a sense of ownership of a shared plan.
What risks would you advise others to look out for?
Everything starts with the people and the culture and you need to work really hard at communication. Not just at the leadership team level – but also engaging the people behind them as that’s where the magic happens. Be upfront with what will change and how it will affect them. If you neglect that there will be no alignment behind a common plan.
Avoid multiple ‘cooks in the kitchen’. Involving some of the target’s team in the leadership team means it won’t necessarily be small, but it is important that everyone is clear about the management structure, has a clear vision of the plan and sees strong leadership.
What key lessons have you learned about building via acquisition?
Use earnouts wisely: They ensure alignment early on and keep the acquired business hyper-focussed on results but can be counterproductive longer term. I would keep earnout periods as short as possible, potentially a year, and provide a share in the bigger company (allowing the acquired team to earn a bigger part in the company based on results). This allows you to focus on integration and creating a shared vision.
Create an integration manager: Someone whose role is to work on creating that combined culture, talent, brand, ensuring the necessary change happens in the first year.
Transparency with acquired teams: Be clear about the opportunities for the founders, be clear that their role will change, and have open discussions about expectations, aspirations and time frames on both sides.
Independent advisory council: Create a council of senior individuals from the industry to provide external advice, 3-4 times a year. This is different from the board and provides a refreshing external perspective. Asking founders of acquired companies to name one or more experts is a good way of building an advisory council which reflects the entire group.
Read the full version of The Bulletin: Issue 70 Buy and build in marketing services