Eric Siu explains why due diligence matters when buying a business. When founders who manage key accounts leave, you lose clients. He recommends keeping sellers around for 2-4 years after the deal to prevent staff burnout and make sure the integration actually works.
When you are buying a company, the seller always has the advantage from an information standpoint. So you got to take your time doing the due diligence because you can decrease that advantage as you talk to them. In one case for the agencies that we got, the founder was involved with every single account. He was super serving every single account, which is good when you're a smaller agency. That's how you build a lot of goodwill with the clients. In this situation, they were not doing any one-on-ones with their staff. People were getting burnt out. They were just sprinting the whole time. Now, that's not how we worked, right? In that situation, the founder basically left immediately. So the way you want to structure the deal typically is you want them to stay on from anywhere to 2 to 4 years. That way incentives are more aligned, because if the leader leaves, then the clients are like, what the heck? Because the leader's on every single account. Then there's also the lieutenants of the leader too. They all look up to the leader. What happened immediately after was like one of the key lieutenants left, and so it starts to become really shaky immediately because business is chaotic. You're integrating 2 chaotic organizations or organisms together. It's like when you put a new organ into your body, it might not take because it might get rejected.
