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Nigerian startups contemplating a merger or acquisition ought to fear concerning the integration part

Acquisitions and mergers aren’t what you see each day throughout the Nigerian startup house, however it does get fairly thrilling for corporations concerned after they occur.

Newly-merged corporations probably acquire from economies of scale, higher monetary sources, growth, and even a fair proportion of media consideration.

However past the company technique, there’s a aspect to a merger or acquisition that makes it such a borderline disruptive, and typically traumatic, occasion.

A story of two corporations

In December 2019, a merger was finalised between HUB8 and Nigerian web hosting company, GigaLayer.

The deal was important not as a result of the legacy firm was a subsidiary of a Czech Republic-based, Russian-owned website hosting firm that’s Africa-focused, however as a result of all of its operations have been moved to GigaLayer, the buying firm.

In the midst of server migration, nonetheless, clients (particularly these from HUB8) skilled a number of challenges accessing common service on the GigaLayer platform as a consequence of server downtime.

Though fairly an disagreeable prevalence, there was no aspect of shock to it. Submit-merger integration is an extremely difficult course of for the businesses concerned.

Equally, final 12 months, Entry Financial institution and Diamond Financial institution introduced a merger that resulted in a switch of all belongings, liabilities, and undertakings of the latter. The post-merger part was characterised by an occasional slowdown of banking providers, notably for on-line transactions. Account holders with each banks who had the identical title have been required to alter their names on account of the merger. And a few account numbers of former Diamond Financial institution clients have modified altogether.

No matter how otherwise GigaLayer and Entry Financial institution are structured, their particular person merger offers present the same sample within the sense that whereas one firm absorbed the opposite and remained in existence, the opposite concerned was dissolved.

So what are the probabilities of a merger integration with minimal impression on a enterprise’ core or processes?

Know-how and product impact

To place issues into context, it’s instructive to have a look at the merger and contemplate the expertise and product as two separate core entities.

Whereas talking with Techpoint, Segun Adeyemi, former co-founder of fintech startup Amplify, famous that the probabilities of startups taking main hits from post-merger integration are decrease if it’s a expertise acquisition.

Adeyemi, who was the co-founder of Amplify till it’s the acquisition by OneFi, Carbon’s guardian firm, emphasised that a lot integration wouldn’t must be carried out if the core of the corporate isn’t centred on the product.

“We’re each very technical in nature, so ours was, to a big extent, easy. It made our objectives align by way of the product side as properly,” he stated.

Nonetheless, as with GigaLayer, issues get rather more difficult when it’s product integration.

“Frankly talking, it’s unimaginable for us to not have modified something. Know-how and product-wise, the distinction was large for each corporations. The very best we may do was to make sure that the legacy merchandise not less than continued with out main interruption,” defined Ahmad Mukoshy, CEO GigaLayer.
Managing buyer expertise

Lots can go fallacious through the strategy of a merger or acquisition. Nonetheless, many of those offers fall in need of expectations due to a failure to grasp the significance of speaking with clients.

Conscious of the challenges with integration, Entry Financial institution — the buying financial institution within the Entry and Diamond merger — introduced beforehand that a number of clients would expertise occasional service disruption.

Due to the fragile nature of a merger part, even the slightest operational change can have a big adverse impression on clients who’re largely uneasy as a result of change and keenly centered on how the brand new relationship impacts them.

“We had a problem with buyer expectations partly as a result of we actually had an assumption of what clients would anticipate from us,” defined Mukoshy.

However, there are methods to scale back clients’ apprehension throughout this part.

Adeyemi suggested that the very first thing to do is respectfully carry the purchasers alongside.

“Particularly when there’s going to be a system shut down or migration to a unique server, there must be communication with clients, giving them sufficient time to regulate to no matter change is coming or to modify preferences if want be,” he defined.

And the place the core is expertise, a number of layers of backup infrastructure in a position to talk with one another must be in place.

“Most vital of all is that the enterprise needs to be available to unravel any arising concern, because it builds buyer belief,” Mukoshy famous.

Nigeria’s startup house is rising quickly and it’s clear from the sheer dimension of funding coming in that companies are more and more trying to develop. However startups wanting in direction of a merger for no matter cause, together with growth, may as properly have this in thoughts.

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