How to Acquire for Capabilities

Acquiring additional capabilities is one of the best ways to do M&A. You can improve your existing offers to your customers and gain access to new markets and demographics. Zoominfo is the go-to-market intelligence platform that helps organizations identify and connect with consumers. In this article, Zoominfo’s founder and CEO Henry Schuck, will help us learn how to acquire additional capabilities. 

"For an M&A deal to get done, it needs internal sponsorship. And unless that happens, acquisitions don't really move forward." - Henry Schuck

Acquiring Capabilities

Henry started his company as a SAS platform (Statistical Analytics Software) that provides companies with high-quality data on its consumers. As the company grew, so did the data assets. Zoominfo now has over 100 million company profiles worldwide, with over 150 million professionals in those companies. When they acquire companies, they're looking for software that can leverage data assets in a unique way. 

A perfect example of this is Apple Airpods. It connects instantly and works well with other Apple products because Apple owns both devices' hardware and software. This is how Henry acquires companies, by making sure that when they plug their data into an acquired software, it will be unmatched in the market. 

Deal Sourcing

When Zoominfo hunts deals, there is a strong emphasis placed on their space, especially the customers. If customers are raving about a specific product, they will reach out and negotiate a potential deal with them. 

Aside from that, they receive a lot of inbound deals. Zoominfo is now well-known for doing M&A, and there are a lot of companies who see them as a potential strategic acquirer. Henry is also very active in building relationships with other owners in the space. 

M&A Process

As a young company, Zoominfo has already successfully acquired 12 companies. They do intensive integration planning right from the beginning before signing a letter of intent. 

After identifying a potential target, Henry approaches the founder and creates a vision of how the two companies will come together. Then he brings in business leaders and has them meet their counterparts in the target company to get to know each other and do a little bit of diligence. 

At the end of those meetings, each person should have a high-level view of how the data will plug into the software and the corresponding numbers that come with it. Then they can work through those interdependencies per function and check the transaction's viability. 

Once internal consensus is met, a 16-20 page board memo is written that articulates why they would want to do this acquisition. When the board approves the deal, they sign an LOI and typically close in 45 days. 

Change Management

When Zoominfo acquires capabilities, integration is a must. And one of the hardest things in integration is change management. However, according to Henry, the secret to success in change management is getting the key leaders on the other side to drive that change. 

No matter what change you make, there will always be people who object to change. Having key leaders be the champions of change will make everything run smoother.