What Happens Behind the Scenes After a Big Acquisition?

SpotOn and Appetize peel back the curtain.
Written by Brendan Meyer
February 9, 2022Updated: February 9, 2022

Two weeks after SpotOn acquired Appetize, Doron Friedman had a bold idea.

The co-founder and chief product officer at SpotOn was tasked with forming an itinerary for the growing product team — which included new Appetize employees —  that had ventured to Chicago to meet for the first time. Friedman could sense the tension and uncertainty, especially from the Appetize folks. How would this acquisition affect their jobs? Their future? What would their new bosses be like?

Dinner and drinks to break the ice was mandatory, but where? Friedman knew the perfect spot.

His home.

At first, some people thought this idea was odd, including Jason Pratts, co-founder of Appetize and now the SVP of product at SpotOn. 

“When the Appetize folks asked me what the plan was, I told them we were going to Doron’s house. And they looked at me like, ‘What? We’re going to our new boss’s house? That’s weird,’” Pratts said.

But it made perfect sense to Friedman.

He’d grown up in a large Jewish family where people constantly came over to his home, many times unannounced, to eat the food his mother prepared. They would break bread, learn about one another, and treat each other like family.

“So I thought to myself,” Friedman said, “‘I’m about to meet a bunch of people I don’t know, but I want them to feel like SpotOn family. The best way to do that? Opening my home, doing what my mother did, and treating them like family.’”

That’s what Friedman’s toast sounded like at the catered event, which featured Israeli food, an open bar and numerous opportunities to get to know one another. 

“After that night, people came up to me and they were so relaxed,” Friedman said. “It was a beautiful experience.”

SpotOn’s acquisition of the roughly 250-person Appetize team, an enterprise cloud point of sale (POS), digital ordering, and menu management platform focused on enterprise businesses, is the biggest investment to date. The exciting part is that the purchase will allow SpotOn to power businesses of every size, but acquisitions come with challenges, too. What happens behind the scenes? How do you ensure a smooth transition? How do you keep people happy?

Built In sat down with three people deeply involved in the deal to find out.

 

WHAT THEY DID, WHAT THEY’LL DO

  • SpotOn was founded to help small businesses compete and win by bringing together payment processing and software solutions, which give its clients richer data and tools that empower them to market and sell more effectively to their customers. Tools for small and mid-sized retailers and restaurants (SMBs) include payments, marketing, reviews, e-commerce, analytics and loyalty.
  • Prior to the acquisition, Appetize was built as an enterprise cloud point of sale (POS), digital ordering, and menu management platform for food services and retail businesses. Over its nearly 10-year history, it built trust with big-name, high-volume businesses, including sports and entertainment venues, theme parks and attractions, restaurants, retailers, education campuses and business cafeterias.
  • Post-acquisition, SpotOn is one of the fastest-growing software and payments companies making it easy for small, mid-size and enterprise business owners to create exceptional experiences for their customers across the restaurant, retail, sports, education and entertainment industries. 

 

BI-SpotOn-Office working
SpotOn

 

Leading With Empathy

When Michelle Zmugg, general counsel at SpotOn, learned of the Appetize acquisition, she tried a little exercise with the HR team.

She told them that SpotOn had been acquired. After letting those feelings of excitement, confusion, and the swirl of questions sink in for a few minutes, she told them it was the other way around. SpotOn had acquired another business.

The point of this exercise?

“Now you know how they feel,” Zmugg said.

Leading with empathy has been the focus for her team as they work to ensure the smoothest transition possible.

“We didn’t buy a company of widgets,” Zmugg said. “We bought a company of people that have values, goals and are hungry for what's next. They’re all wondering, ‘How is this going to affect me, and how is this going to support me?’”

For Zmugg and her cohorts, answering those questions has meant setting up a merger hotline email where people can ask questions 24/7 about everything from, “How do I sign up for 401(K)?” to “Can I get another SpotOn t-shirt?” It has meant changing some of SpotOn’s benefits to coincide with the ones that Appetize employees are familiar with, like switching SpotOn’s basic vacation policy to flexible PTO, and adding the additional paid holidays that Appetize offered.

We didn’t buy a company of widgets. We bought a company of people that have values, goals and are hungry for what’s next.”

 

It has meant small gestures, like merging Appetize’s popular Slack channels with SpotOn’s, and including a little pet bandana in everyone’s welcome kit.

“We knew they were a pet-obsessed company, so that was a small way of showing them that we see and appreciate that part of their culture,” Zmugg said. “It was a hit.”

Like most acquisitions, there were challenges. As Zmugg explained, the HR team was at a disadvantage when SpotOn acquired Appetize for the sole reason that SpotOn obviously didn’t have a chance to interview every single person before signing the dotted line. Now, Zmugg and the HR team are playing catch up, getting to know each person and address their questions and concerns, while also assessing how their new role fits into SpotOn.

“I think the biggest challenge for me is that I want everyone to be happy. I want everyone to feel valued,” Zmugg said. “But you have to realize that not everyone is going to feel good right away. You need to give people space to process.”

It’s all about finding the right moments, Zmugg added. For example, an employee from Appetize recently reached out via email with a question. Zmugg could’ve easily typed a response, but instead, she asked if they could set up a video chat to talk it through. During the chat, she learned that this employee was on parental leave when the acquisition took place, and after answering his question in detail, he was about to hop off the call when Zmugg stopped him.

“‘Hey, wait! I want to talk to you,’” Zmugg recalled saying. “‘How’s it going? How’s your new baby? What has it been like since you’ve returned, now that you’re at a different company?”

They ended up having a great conversation, which thrilled Zmugg, because it was a chance to get to know someone instead of just answering an email. 

“Later on that day, he sent me an email with a picture of his daughter,” Zmugg said. “And he thanked me for reaching out professionally and personally.”

 

 

BI-SpotOn-working office
SpotOn

 

Better Together

There’s a reason why the theme for this acquisition is “Better Together,” and it has nothing to do with Jack Johnson. Simply put, Appetize and SpotOn complement each other’s strengths.

“SpotOn, especially in the restaurant and retail space, has one of the best online ordering solutions in the marketplace. We have a cloud-based system. We have scheduling and appointment software. We have invoicing technology,” Friedman said. “On the flip side, Appetize has these great kiosks and kitchen display systems (KDS). They have offline mode, and they’re also cloud-based.”

What this marriage of strengths creates, Pratts explained, is a company that can now support a business of any size through every step of their journey — from a small mom-and-pop shop, to a business with 1,000 locations and kiosks at Yankee Stadium.

“When you look at the industry and at every piece of technology that a restaurant, retail or enterprise business needs, we have a solution in house that can meet that need,” Pratts said.

As an added bonus, both Appetize’s and SpotOn’s tech stack is almost identical, which will make integrations a breeze.

We have to stress to them that we’re growing. Everybody loves to be a part of a growing company. And we’re investing — investing in them.’’

 

On the product and tech side, what’s the next step in an acquisition like this? For Friedman, it starts with listening. That’s what leaders should be doing in the first 60 days, he said. After that, you build a plan, and you do it together. 

“The key is getting everybody involved and making sure everybody’s committed,” Friedman said. “We have to stress to them that we're growing. Everybody loves to be a part of a growing company. And we’re investing — investing in them. We’re gonna make mistakes, and we’ve made mistakes. But as long as you correct them early and you’re sincere, that’s half the battle.”

Pratts shared something else he’s learned during this process: Communicate often. Over-communicating and connecting with people as their feelings, emotions and questions change by the day or hour is critical, Pratts explained. 

And one other thing.

“If I ever acquire a company, I’m inviting my new co-workers over to my house,” Pratts said. “That was special.”

 

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