Mergers and Acquisitions: How to Acquire for Capabilities

Henry Schuck, the founder and CEO of ZoomInfo, was recently on the M&A Science Podcast, hosted by Kison Patel, where he talked about his experience with mergers and acquisitions.

Since 2015, ZoomInfo has made 12 acquisitions with multiple purposes in mind. For some, the goal was to purchase competitors and acquire their customer base. Others brought new capabilities to the ZoomInfo platform, creating a better product and customer experience. 

Here’s a glimpse into the process: 

Identify a Need

At the beginning of each year, Schuck drafts a list of business areas where M&A should be prioritized, creating a blueprint for the year ahead. ZoomInfo tends to be opportunistic in its approach to acquisitions, so in order to remain diligent and focused on improving ZoomInfo’s capabilities, the company uses this blueprint to avoid getting “deal fever.”

Executives then work with the strategic finance team to identify companies that would add value to ZoomInfo’s platform and align with the annual blueprint. 

Vet Potential Targets

Schuck said ZoomInfo has created a structured vetting process to make sure that when good opportunities arise, he and his team can act quickly. Here’s the criteria they consider with every potential transaction:

1. Does it make sense for our customers? 

Will this software improve our user experience and apply to sales, marketing, or recruiting? If not, we’re not interested.

2. Do we build or buy?

Are these capabilities something that our engineering team can create? Or is a purchase necessary? 

“When there is some asset that has to get built up over time for the product that you’re delivering to be really valuable, you just have to do M&A there,” Schuck said.

For example, before our recent acquisition of, a conversation intelligence platform that records and analyzes sales calls, ZoomInfo researched building something similar from scratch. We realized that a conversation intelligence platform requires hundreds of thousands of hours of calls to build out successful models and effectively analyze calls. So we chose to acquire Chorus instead — and it’s definitely paid off.

3. How much of our customer base will get value?

Our product gives us a really unique view of our customers, including what types of tech our customers are using. This view helps us gather data on whether a purchase would be beneficial to a large portion of our customers, which helps us determine its worth.

4. Can our data make the software competitively differentiated? 

Our data asset is best-in-class, and when we make an acquisition we want to make sure our data pushes that software miles ahead of its competitors. We create a really tight integration between software and data to ensure we remain an industry leader.

Schuck gave the example of Airpods and their hold on customers. “Before Airpods, the sound, microphone, or bass quality was what differentiated headphones,” Schuck said.

So why have Airpods been a success even if they’re not competing on sound quality? Ease of connection and function. “Since Apple owns both sides of the equation — hardware and software — all of the sudden, the differentiator becomes that they connect quickly and they work.” 

5. Can we sell more of it? 

And lastly, our sales team is incredibly specialized and we’ve developed “one of the most efficient go-to-market motions in the world.” We want to find products that fit seamlessly into how we sell, so that we can not only incorporate them into our current sales calls, but also easily introduce them to new audiences. 

Facilitate a Smooth Acquisition Process 

When a company is determined to be a good fit for ZoomInfo’s needs, Schuck meets with its founder and organizes meetings between members of each company’s executive team. Before these meetings take place, he asks the ZoomInfo team to provide feedback on the potential acquisition and identify any challenges they foresee.

Once the internal team comes to a consensus, they write an in-depth board memo that includes why they should make the acquisition, the pros and cons, how the software will integrate with ZooInfo’s platform, and a detailed model of their commitment. This commitment summarizes things like cost, history of the business, and plans for profitability. 

This board memo is used across both organizations to get everyone aligned, and teams — from IT to HR — to work preparing for the acquisition. From there, a Letter of Intent is drafted, and ZoomInfo has 45 days of due diligence to close the deal. During this timeframe, the following questions are addressed: 

  • What happens on day one? 
  • How will we communicate? 
  • Which employees are coming over?
  • What will their titles be? 
  • Who will they report to?
  • What’s the website going to look like? 
  • What will be covered in the press release?

Amit Rai, the former chief operating officer and co-founder of EverString, said that being acquired by ZoomInfo was a once-in-a-lifetime opportunity to “learn from the best go-to-market leaders and machinery in the world,” and that his contributions to the ZoomInfo platform have mirrored what he’s gained from being part of the team. 

“EverString built one of the best technologies in the world through the application of artificial intelligence and machine learning, however, we failed in our go-to-market execution to scale the business,” Rai said. “Therefore, when we were considered for acquisition by ZoomInfo, it was a no-brainer for us to be part of a founder-led, fast-growing business, and it turned out to be a great decision.”

Read more: 7 Lessons for Tech Leaders from ZoomInfo’s CEO

Ensure Cultural Alignment

One of the most essential pieces of an acquisition is ensuring cultural alignment across both organizations. 

“A good percentage of acquisitions fail because of lack of value alignment between the companies,” said Arjun Pillai, ZoomInfo’s senior vice president of growth, formerly the founder and CEO of Insent (now known as ZoomInfo Chat). “When ZoomInfo was acquiring Insent, Henry and I spent a full day in his office talking through and making sure we were aligned and felt good. As a result, after the acquisition, the team transitioned without hiccups.”

In instances when cultures don’t match well, leaders have to be able to make tough decisions. Schuck typically gives acquisitions 60 days to work out any kinks. If after 60 days he’s not seeing the performance he was expecting, he knows changes need to be made to the organizational design or personnel. 

Proactively Manage Change

Acquisitions bring about a lot of change, and that can take a toll on your staff. Even when cultures align, you still risk losing employees if change management isn’t prioritized. 

Transparent communication is the key to good change management. Schuck says it needs to be emphasized from both sides, and leadership must be aligned and able to articulate what both companies are marching towards, how it will occur, and the key drivers on each side. Lastly, leaders need to listen to employees as the changes occur and respond proactively to their feedback. 

When Things Go Awry …

Even though Schuck has 12 acquisitions under his belt, missteps can still occur. He gave an example of a company that he acquired, integrated, and took to market. While it was easy to sell the product, the customer renewal rate was much lower than expected. Through trial and error, ZoomInfo realized there was a mismatch in buyer persona

“It’s a very iterative process,” Schuck said. “Thinking through all of the nuances that come with the go-to-market motion is critically important to not failing once you make the acquisition.”

In other cases, he’s had to be more patient than he anticipated. When Schuck acquired Tellwise (now known as Engage), he knew the product would be a great fit for our customers. However, at the time of acquisition, there was a huge increase in demand for ZoomInfo’s core product, which required additional engineering and resources.

This created a three-year delay in the launch of Engage. While it was a difficult decision to wait on taking Engage to market, ZoomInfo’s patience paid off, and it’s now one of the most in-demand products in the ZoomInfo suite. 

Mergers and acquisitions come with their fair share of challenges, but when executed properly, the payoff can be huge. Companies looking to improve their product’s capabilities should think critically about what they want to achieve, how they plan to achieve it, and how to properly communicate these goals to their employees. 

“You need to articulate a vision for the company’s future, and that’s good for everybody,” Schuck said.