Your First Acquisition Will Test the Company You Already Have
How a first-time buyer can prepare for the transaction while building capability for the next one
A first-time acquirer can assemble an experienced deal team, retain strong legal, financial, tax, commercial, and integration advisors, and its executives may have participated in acquisitions at previous companies. But it is still a first-time acquirer.
M&A experience does not become an organizational capability merely by being present in the room. Research on how firms learn from acquisitions lists over-reliance on advisors’ experience among the practices that keep a company from building its own (Kolev & Haleblian, 2018). The company has not yet demonstrated that it can run its existing business while absorbing another, govern the decisions the integration will produce, recognize which capabilities to protect, or turn what it learns into a repeatable method.
The first acquisition tests more than the transaction thesis. It also tests the company that already exists. And for companies whose first deal didn’t go as planned, the same questions are the place to start before the next one.
Strong operators are not automatically experienced integrators
Middle-market companies often assign integration responsibility to their strongest executives. The logic is understandable: these are the people trusted to solve difficult problems and deliver results. For that same reason, they are usually the people keeping the existing company successful.
The head of operations may be expected to consolidate processes while protecting service levels. The CFO may be responsible for financing, reporting, systems, synergy tracking, and ordinary financial control. The head of people may be managing retention, leadership selection, communications, cultural questions, and the needs of the existing workforce. The CEO may be the deal sponsor, primary decision maker, board interface, and escalation point.
An integration structure can look good on paper while depending on capacity that isn’t there. That creates two risks: the integration may progress too slowly, or the base business may weaken while the integration appears to remain on plan.
Part of the reason this goes unexamined is where the diligence effort is concentrated. Buyers examine the target in depth. Examining their own readiness, sometimes called self-due diligence, is a recognized step that is often overlooked (Galpin, 2020).
A first-time buyer must therefore ask not only who can lead the work, but what the tradeoff is if they do. What stops? What gets deferred? What will be delivered at a lower standard than everyone is accustomed to?
For some companies, answers to these questions point to timing rather than a verdict: not yet, and what would need to change first. That is a useful finding, not a failure.
Conditions are different from surprises
Every transaction will deliver surprises. But some challenges described as surprises begin with visible conditions whose implications were not fully considered. One diligence gap is common, and first-time buyers may be less practiced at spotting it: confirming what the target achieves without understanding how it achieves it.
Consider a target with excellent on-time delivery and unusually strong retention among its largest accounts. Diligence confirms the numbers. It may not examine the mechanism behind them. Experienced schedulers and customer service staff routinely expedite orders for key accounts outside the formal system, and a regional manager tolerates it because it works. Customers know these people by name.
The buyer, reasonably, plans to move the target onto its own order management process and approval rules. Standardization looks like a straightforward efficiency gain and an improvement in control. Once it takes effect, the informal path closes. The experienced staff either comply or leave; the service slips, and the largest customers notice before the integration dashboard does.
The condition was visible in the signal of performance that is better than the target’s formal processes would predict. Often, that difference is being carried by people, and by the informal routines and customer relationships they maintain.
Research agrees. In a survey of 92 Nordic mid-size acquirers, integrating tasks and processes tended to increase employee resistance and lower acquisition performance, while attention to the human side of integration reduced resistance, and that benefit was stronger for experienced acquirers (Horton et al., 2024). Bain’s 2023 M&A research found that people issues, integration road maps, and revenue synergies are among the least accurate areas of diligence. Without prior integration experience, a buyer may be more likely to default to standardization, and less practiced at seeing what it could break.
If the condition is recognized before close, the acquirer can prepare. It can ask how results are produced, not only whether they are; identify which informal practices carry performance and who holds them; decide which to preserve, formalize, or replace before standardizing anything; retain and engage the people involved; and watch early indicators such as expedite volumes, key-account escalations, and turnover in critical roles.
If the implications become clear only after standardization begins, the company has fewer options and less time. It may need to reverse process changes, re-engage people who have left or disengaged, repair relationships with its most important customers, and rebuild the integration plan while management attention is already stretched. Revenue synergies are often the first to slip.
The same logic applies to systems, suppliers, and contracts. Diligence may confirm that vendor agreements and system overlaps exist without establishing who owns the decision to connect or consolidate them, or what evidence should show that each step is safe.[C1]
SCALE, the diagnostic framework I use, does not prescribe an integration sequence or a technical architecture. It reads an organization across five pillars: Strategic Alignment, Capability to Execute, Accountability & Governance, Leadership & Culture, and Enterprise Resilience. They are pillars because they are load-bearing. When one weakens, what rests on it becomes unstable, even while the others look sound. An informal mechanism like the one above often sits in Capability to Execute and Leadership & Culture while carrying results that appear elsewhere.[C2] SCALE helps surface conditions and dependencies like this, clarify who owns the decisions they create, and, read alongside operating indicators, show whether integration changes are strengthening the company or quietly weakening it.
Build the first integration around the value thesis
A first-time acquirer is especially vulnerable to mistaking thoroughness for effectiveness. With no internal precedent, it may adopt a large checklist, assign workstreams across every function, and attempt to integrate everything that can be integrated.
Experienced integrators know integration is not an exercise in maximum activity. It is the set of changes required to realize the value thesis while protecting what made both companies valuable. The buyer should be able to answer:
• What must be true organizationally for the deal thesis to work?
• Which decisions will create or destroy the greatest value?
• Which target capabilities are part of what we are buying?
• How does the target produce the results we are paying for?
• What must be aligned immediately?
• What should be preserved until we understand it better?
• Where is temporary redundancy safer than premature consolidation?
• What conditions would tell us that our assumptions were wrong?
These questions help the company choose an integration approach deliberately. Haspeslagh and Jemison’s framework distinguishes absorption, preservation, symbiosis, and holding, and the right choice can differ by function or capability within the same deal. The point is to choose, rather than treat integration as synonymous with making the target look like the buyer. In a study of U.S. bank mergers, deeper integration generally improved performance, but replacing the acquired firm’s top managers hurt it (Zollo & Singh, 2004). What looks like simplification can remove part of what the buyer paid for.
Measure condition, not only completion
Along with milestones, first-time acquirers need to know whether the milestones are changing the organization in the intended way. Closing a workstream does not prove that the underlying condition improved.
A SCALE reading, a structured multi-rater assessment across the five pillars, gives that evidence a consistent basis. The most useful one can be taken before a target is chosen: the acquirer’s own reading of its leadership capacity, decision bottlenecks, governance maturity, alignment, and resilience, while there is still time to address what it shows. Once a target is in view, a target reading, where access allows, provides a pre-close reference point. The first post-close reading establishes the combined-company baseline.
A reading describes organizational conditions. Operating indicators, such as expedite volumes, customer escalations, and turnover in critical roles, show whether those conditions are reaching customers and results. Neither is sufficient alone. Together, they let the company track whether:
• Leadership has enough capacity to operate and integrate
• Decision rights are understood in practice
• Critical customers and employees are extending their confidence to the combined company
• The mechanisms behind the target’s performance are intact
• Key target capabilities are being retained
• Dependency on the founder or other individuals is decreasing
• The base business remains protected
• Integration assumptions are proving true
• Improvement efforts are strengthening the company or merely adding change
That evidence also makes board oversight more useful. Directors can focus on changes in condition and emerging constraints rather than receiving only task completion, synergy totals, and selected success stories.
Make the first acquisition improve the second
The first transaction creates the company’s initial acquisition memory. Whether that memory becomes institutional capability depends on what the company retains, and how.
The research here is instructive, though not unanimous. In a study of 449 acquisitions, Haleblian and Finkelstein (1999) found that relatively inexperienced acquirers tended to apply lessons from their first deal to later deals that were not alike and performed worse for it. Zollo and Singh (2004) found that codifying acquisition experience improved performance, while simply accumulating it did not. Other studies find that experience helps when it is captured deliberately and applied with discrimination.
A retrospective conducted from recollection often captures the most visible events and strongest personalities, which is exactly the kind of memory that generalizes poorly. A longitudinal evidence base can show what the company believed before close, what diligence revealed, where integration encountered difficulty, which actions changed underlying conditions, and which signals should be examined earlier next time. It also records the circumstances of the deal, so the company can tell which lessons travel to the next one and which do not.
The company may learn that it integrates operations well but clarifies decision rights too slowly. It may find that it protects customer relationships but overloads its executives. It may discover that preservation works better for capability acquisitions while absorption is appropriate for scale. It may learn that leadership depth, and not financial capacity, is the constraint on its acquisition pace.
As the comparable sample grows, the company may place its experience in context: whether its conditions are typical, unusual, or historically associated with greater execution difficulty, among first-time acquirers, at its transaction size, or under its ownership structure. The purpose is comparison, not prediction of success.
Those lessons should shape the next target, the next deal structure, the next integration model, and the next board discussion. The first acquisition will test the company you have. What the company keeps from that test determines whether the second deal finds a more capable one.
References
Bain & Company (2023). Global M&A Report 2023.
Galpin, T. J. (2020). Winning at the Acquisition Game: Tools, Templates, and Best Practices Across the M&A Process. Oxford University Press.
Haleblian, J., & Finkelstein, S. (1999). The influence of organizational acquisition experience on acquisition performance: A behavioral learning perspective. Administrative Science Quarterly, 44(1), 29–56.
Haspeslagh, P. C., & Jemison, D. B. (1991). Managing Acquisitions: Creating Value Through Corporate Renewal. Free Press.
Horton, K., King, D., Bauer, F., Lamont, B., & Schriber, S. (2024). Integration, employee resistance, and acquisition performance. [C3] European Management Journal. https://doi.org/10.1016/j.emj.2024.02.003
Kolev, K., & Haleblian, J. (2018). When firms learn from prior acquisition experience. Journal of Organization Design, 7, 8. https://doi.org/10.1186/s41469-018-0032-7
Zollo, M., & Singh, H. (2004). Deliberate learning in corporate acquisitions: Post-acquisition strategies and integration capability in U.S. bank mergers. Strategic Management Journal, 25(13), 1233–1256.
[C1]Your original systems and supplier example, reduced to one sentence so technical readers see it is covered. Keep or cut?
[C2]First introduction of SCALE, moved here from the end of the section. Please confirm the pillar description and whether you want this level of detail in a LinkedIn piece.
[C3]Published online February 2024; appears in a 2025 issue. Confirm final volume and pages before publishing.