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For high-growth companies, M&A is almost inevitable. If done right, it could speed up growth and open new opportunities for the acquiring entity. However, it’s not without challenges, as it can also be destructive and destroy both companies involved. In this article, Glenn Sanford, CEO of eXp World Holdings, Inc., discusses the art of M&A, and striking the right balance between integration and autonomy.
“When we bring on a company, I leave the team intact and allow them to continue to build on. The business operation, the strategic initiatives, that’s the secret sauce that they bring in. And if we had the expertise in-house, we wouldn’t need to acquire them. ” – Glenn Sanford
EXP Realty started in 2009 and became the largest single-entity real estate brokerage in the United States. They operate without physical offices and utilize virtual online platforms to keep their brokers and staff connected. These online platforms always went out of business and that forced eXp to acquire Verbella to ensure business continuity and preserve their long-term trajectory.
Their second acquisition was a company called Showcase to optimize and control their website from a search perspective. They also acquired Success Magazine to market and endorse their agents, and Zoocasa to boost their lead generation. By using M&A, they were able to enhance their growth while increasing sustainability through their own ecosystem.
Balancing Integration and Autonomy
One of the most crucial factors that made their acquisitions successful was their integration strategy. According to Glenn, they were aiming to achieve aligned autonomy and refused to control the acquired company with bureaucracies. Aside from the back office integration, they left the business operations and decision-making to the acquired leadership.
As a result, target employees and leadership didn’t mind being acquired and were happy to be a part of the new company. With the right balance of integration and autonomy, they have achieved cultural alignment, which is essential in a successful M&A.
Advice
For companies who want to do M&A, don’t do acquisitions just for the sake of doing an acquisition, says Glenn. Entrepreneurs must identify their company's unique strengths and repeatable systems, and use M&A to improve their ecosystem and propel the mission of the company. Understanding the purpose behind every acquisition is crucial to ensuring they bring strategic value and contribute to the company's overall success.