Human Capital Considerations During a Major Transition
We're here to really talk about two transitions- two stories. One of a strategic acquisition which resulted in the owners' exit and the other, an evolution/gestation of a business. Having the right team influences the valuation of a transaction.
How do you ensure you have the right team and keep them engaged throughout a transition?
Meet Dan Price--former CEO of PriceInteractive. Dan hired Kathy Albarado (me)--as Director of HR--at 15 employees to help him build his organization as he knew he wanted to scale his company. Having just paid his first head-hunting fee at 25% and knew that model wouldn't be effective at the economies of scale that they needed. In less than 4 years, the company grew to 200 employees. Together they built a dynamic team of professionals, without government contracts, venture capital or brand recognition. We established the necessary HR and operational infrastructure that would support a growing company—and were intentional about our hiring at a time when the market was exceedingly challenging to attract talent. Yet, not only did we hire the best and the brightest, we created a results oriented culture and one where employees demonstrated a pride in ownership. It was truly a remarkable place to be.
As VP of Business Development, Paul Logan joined us from Lucent Technologies to focus on growing the company. Paul was attracted to the opportunity to make an impact in a rapidly growing organization and recognized the market opportunity.
During this time, it became evident that the industry was being flooded by new players, many with millions of dollars in capital behind them. In 2001, the Prices entered into a transaction with iBasis, a publicly traded VOIP service provider in order to tap into the capital they needed to scale.
It's my belief that this story is a testament to the value that a team plays in establishing a price for a company. One year later, after Dan's exit and that of several key employees, the company was sold again.
My thoughts are that iBasis failed to engage their newly acquired employees from the very beginning. It was apparent that the cultures could not be more diametrical opposed. Instead of recognizing this and embracing it, there was a lot of posturing about which culture was the 'right' culture. We missed an opportunity to communicate to employees the importance and vision for why the deal made sense.
Price was built with an entrepreneurial spirit, and many entrepreneurs were hired by the firm. Its unraveling led to the creation of multiple businesses being started. This was truly a case study in how not to conduct an acquisition. As the team became increasingly disengaged and disenfranchised, Paul and two other members of the executive team were able to recruit key employees to start a competing organization--Contact Solutions. As CEO of Contact Solutions, Paul Logan is running a successful contact management business and is rapidly dominating the market he is in.
Also at this time, I launched the company that has become Helios today. As we had such a dynamic and engaged corporate culture at Price, I was passionate about working with other executives in helping them create that culture in their organization. Since that time Helios has served over 500 companies in the Washington market—helping them scale their organizations as they take them to the next level in their stage of growth.
To hear more about our story, the three of us will be speaking at the XPX DC Metro Chapter on Thursday, June 21st at the Timpano Chophouse Restaurant. We'll discuss the risk and impact of losing key talent as a result of a major transaction as human capital considerations -- specifically those impacting key talent -- are often ignored through the due diligence process. Our panel will lead a discussion that will address the following:
- Do you have the right talent to attract the interest of market players?
- Are you prepared to retain your key talent through significant transactions?
- Do you know how to protect your competitive position with retention of your talent?
Date: Thursday, June 21, 2012
Location: Timpano Chophouse Restaurant, 12021 Rockville Pike, Rockville, MD 20852
Time: 7:30 - 9:00AM
Cost: $20 for members; $40 pre-registration for non-members; $50 for non-members at the door. Continental Breakfast will be served.