How to Survive Hostile Takeovers
It’s 3 a.m. on 31 March 2010. I’m staring at the ceiling, fighting back the feeling of drowning. Agonizing questions are running through my brain like elite athletes: How could this happen? What could I have done to prevent it? What happens next?
The day before, during a routine board meeting, a senior officer blind-sided me with false accusations and grave threats. As CEO and president of an insurance company, I had felt the rumblings of a volcano over the previous months. However, never could I have imagined how deep, widespread and destructive things would get. Nothing in my 20 years of experience had prepared me for this.
“Hostile takeover” makes it sound so … mild. This was downright nasty. This senior officer, who knew the potential of our business, would stop at nothing to bury me and waltz into my place. For seven months, I was ravaged by sleepless nights, my marriage and family suffered, and the temptation to walk away—even with the potential loss of a substantial investment—was almost overwhelming.
With a bit of luck, a lot of persistence and more ugliness than I care to remember, I saved my company. Here are six lessons I learned about surviving an attempted hostile takeover:
Acknowledge the breakdown in your business. For several months before the official eruption, I sensed
something was wrong. I would come into the office and greet employees, only to be frosted by cold shoulders. Board members and shareholders began questioning my leadership. Looking back, the clues were obvious. Had I recognized them sooner, I could have confronted and dealt with the issue before it blew up.
Keep your finger on the pulse of your team. My fatal mistake was not keeping my finger on the pulse of internal management. The senior officer who attacked me was someone I thought I could trust, but he was spreading rumors about me to employees, board members and shareholders. I’ve since learned not to completely ignore the management side of my business. I’ve also learned to trust my gut instincts.
Know your “why.” When confronted with a takeover, you’ll be forced to choose whether to fight or walk away. If you choose to fight, you must know your “why” down to your bones, and it must be stronger than your opposition. That gets you through the dark hours and gives you the strength to face each new challenge.
Identify your support team. Without the support of an awesome wife, Forum and assistant, I would have been a casualty of war. Know whom you can trust and build a core and intimate support team; remember to rely on them frequently. They’ll talk you off of ledges and give you perspective, strength and guidance.
Invest in third-party investigations. After consulting with my attorneys, I demanded a full investigation that
cost US$150,000— all because of false rumors instigated by one individual. The investigators delivered a clean report. These events taught me to do whatever it takes to shed full light on false claims that undermine your leadership and threaten your control. Third-party investigations are vital, even if they’re not required. Although I was initially dismayed by the high cost, the investment was worth it.
Keep your board independent. My board was corrupted by having senior officers serve as both internal managers and board members. Our corporate governance policies were also lacking in specific and critical ways. The biggest take-away: Keep your board independent by not allowing them to hold internal company positions, and make sure your governance policies are completely legitimate and updated.
The threat of a hostile takeover in business is very real. Don’t be as naïve as I was. Instead, understand the threat and be prepared to deal with it. Don’t give up if it happens to you. You can survive, and you will be better for it. I have the scars to prove it.