There are many transitions that founders may go through in their business, but managing a merger is arguably one of the biggest shifts.
Phil Derksen, the original founder of WP Simple Pay spent a few years as a solo founder before a merger with Sandhills Development in late 2018, as he shared with us recently on our podcast.
“At the time it was just me as a solo founder, with a few contractors,” Phil says. “I was still writing code, doing marketing… wearing a lot of hats.” The shift has been huge – he now works with a team of 24, and does no coding or support himself.
We wondered what transitioning has been like and how Phil managed it as a founder. Here’s what we found out:
Before the merger…
For most founders, the idea of a merger can be both exciting and nerve-wracking. When you’ve been used to being the sole decision-maker and creator in your business, you wonder what is it going tot be like working with someone else? Will the business you have built be enhanced by the merger?
We asked Phil what key things startup founders should observe or be aware of before signing on the dotted line for a merger:
“Do your best to get clarity on what your new role will entail,” he says. “Ask what the acquiring company’s expectations are with your new role and express what you’d like it to be. You’ll probably need to compromise in a few areas but be as detailed as possible.”
It’s important to have a very clear understanding of how a merger works and the expectations of both parties. You have to also consider what sort of time and activities are needed from you over that transition period.
“Plan for some time for the acquiring company to familiarize themselves with your product and business processes,” Phil says. “If you and they plan on hiring people to take over support, development and/or marketing, try to document time frames that both sides expect for that transition to take place.”
Alignment of roles and goals
One thing Phil talked about was the importance of ensuring that the roles and goals are aligned going into any merger. You have to make sure that everyone is on the same page, and expectations are clear.
“Have lots of discussions with the acquiring company’s decision-makers about these roles and goals,” he says. “Think through your long-term goals and find out if they line up with the company’s. As I mentioned earlier, be very clear and detailed about them, but also be willing to compromise in some areas if you can come to an agreement that’s an overall win-win.”
Making the transition work
Phil has remained with the company ever since the merger, although we know of many founders who don’t stay beyond the transition period. Obviously, there can be a variety of reasons for this, including that the founder simply wanted to take time out.
In Phil’s case, although working with a much larger team represented a major change, it was something that really represented the next logical step in his journey with WP Simple Pay. We asked him what, from his perspective, made the transition work and a big part of it is because it allowed him to take the next steps, where it would have been difficult on his own.
“With business partners and a team now helping out with the product I brought over, I have been able to transition to a full focus on product and marketing while stepping away from other responsibilities such as development and support,” Phil says. “I feel this new focus is much more valuable to my existing product and the company as a whole rather than the daily and weekly split focus I had earlier. This new focus is also more rewarding personally and gives me a better sense of accomplishment.”
So overall, the merger has been a success?
“It’s great because I felt like I wanted to focus more on marketing, but didn’t have the time,” he says. “Our developers are taking the product further, faster than I could have myself.”
Transitioning your mindset
It’s obviously a big shift to go from being a solo founder, managing contractors every now and then, to being part of a larger team where you’re now answerable to partners. There may be many aspects of how you manage your daily work or how you make decisions that need to change.
We asked Phil what has changed significantly for him in terms of mindset and how he approaches his work now:
“As I now have business partners and co-workers to lend a hand and collaborate with, I know I can ask for help when I don’t have the time or expertise to accomplish certain projects or goals,” he says. “However, it has been a gradual process to learn the best methods to ask for help and for communicating all the relevant details.”
“On the flip side, I feel a new sense of responsibility now that I am making decisions and working on projects for more than my existing product,” says Phil. “I don’t want to slack off or let others down, whereas before if projects got delayed I only had myself to answer to.”
So in some ways, working with a larger team through a merger can be motivating, especially if you’re invested in the continued success of the original business or product. Learning to reach out when you’re used to doing everything yourself is a major step!
Challenges of a merger
Overall, the merger of WP Simple Pay with Sandhills Development has been very successful, but of course, there were still challenges during the transition period. We asked Phil what the significant challenges were, and how he worked through them:
“Learning to communicate effectively with a larger team has been and continues to be challenging,” he says. “Previously a solo founder with only a little contract help at times, I wasn’t used to delegating and collaborating on most tasks, and I certainly didn’t document many of my own processes. Now with folks helping out in all those areas, it’s important that I’m clear with projects and tasks I’m heading up or handing over.”
It sounds like documentation of processes and procedures would be a great idea ahead of a merger. In some cases, you’ll find that companies want to see those documented processes ahead of making a merger decision.
How has he managed effective communication with the wider team? “When I first joined Sandhills Development most of our communication was done through Slack and Trello,” Phil says. Slack is by nature synchronous, at least the way we were using it. Although this was already showing signs as an issue in the past, it only began to pose more problems as the team grew past 16 people.
Folks in different time zones would miss out on key conversations that weren’t recorded elsewhere. Many of us that needed to focus on tasks without interruption missed important information when we closed down Slack for a bit.
We were also outgrowing Trello as our main project management tool with the sheer volume of tasks that needed to be tracked. We started gradually moving to Basecamp and using more and more of its Shape Up methodologies for both product development and marketing/business projects. We also focused on using Basecamp over Slack for anything that did not need to be discussed synchronously.
We’re far from perfect, but we’ve definitely seen improvements over the past year and are always looking for ways to get better at communicating moving forward with now 24 team members and beyond.”
For many founders, a good merger or even an acquisition is a major goal they aim for, but it always represents a huge transition period. Phil, like many other founders, began as a solo act and through the merger, has rapidly become part of a much larger team.
To get through this sort of transition successfully, some key points are to:
- Clarify roles and expectations early on
- Understand how goals and roles line up
- Evaluate where you want to be and how your new role will contribute
- Deftly manage communication and remember to involve the wider team!
In Phil’s case, the merger has been an overall success. “I have several business partners instead of being a solo founder,” he says. “I can take a collaborative approach to major campaigns and decisions, tapping into the wider knowledge of the group.”