June 18, 2021

A Tool Investors Use to Create Strategy in 90 Days

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ASG has been in business for almost 4 years now and has acquired 36 companies to date. About two years ago, we started doing what we now call First 90s.

What is a First 90?

People in the M&A world heavily focus on acquiring businesses (after all, it’s half of the job). But one of the questions I get most often from sellers is, “What happens next after my business is acquired?”

The process of selling your company is a grind, and can take anywhere from 2 - 24 months. Not many people think about what happens the next day. Do employees change their behavior? Do customers suddenly stop getting service? No! There is still a business to run despite a transition of ownership. So what we’ve put in place is a practice where we can continue to operate the business with as little disruption as possible, and learn about what we have bought. ASG’s typical pre-acquisition diligence takes anywhere from 45 - 90 days, meaning we have less than 3 months from the first time we hear about a business to owning it. 

We can’t pretend to say that in that amount of time, we can learn 100% of what there is to learn about the company. While we can learn a lot, it is not nearly enough time to make company-changing decisions. That is what our First 90 is for. During the following 90 days after the acquisition, we can test some hypotheses we’ve made during the pre-acquisition diligence, and use the time to get to know the team, customers and details behind what makes those two groups tick.

Components of a First 90

When we start off the task management process, we recommend the existing and/or new management that we’re supplementing the business with, to focus their First 90 findings on the following areas:

  • People
  • Product
  • Sales & Marketing
  • Customer Success
  • Expansion opportunities

None of those areas are rocket science to call out as being key drivers of a software company. But when we look at those areas under the ICE framework (Impact, Confidence, Effort), we can identify our roadmap or to-do list. We identify what needs our attention first, what will have the largest impact on the business, and what’s going to require the most amount of lift. More importantly, it gives us time and a framework to get to know what the business will look like in 12 months, and 10 years from now. 

Having that plan in place gives us the comfort required to feel confident in our decision-making, and gives the team and customers the confidence that we are here first and foremost to serve and learn from them.

The First 90 applies whether you’re selling or not

Software companies are not as simple as just taking the 90-180 days to learn everything there is to know, but it’s one heck of a great start. The First 90 positions us to have a very clear take on what it is we have our hands on, and what we’re going to be focusing on moving forward. 

If you’re selling your business, it can be helpful to think of a First 90 as an “audit” on your business. But you don’t need to sell your company for the First 90 to be beneficial to you. Since implementing this in every acquisition ASG over the last 2 years, we have been more prepared for the first year of our ownership than any acquisition we've made prior to putting this practice into place.

Give it a try and let us know what you think! If you have any questions, feel free to contact us.


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