When Healics Inc. and Interra Health Inc. decided to merge in March 2017, it was a combination of equals.
Milwaukee-based Healics specialized in employer-sponsored health and wellness programs. Founded in 1985 as health and wellness software firm Health Steps, it had transformed over time and grown to about 100 employees nationwide. Patti Plough and Michael Naparalla had owned Healics since 2011.
Brookfield-based Interra Health offers employers wellness programs and on-site and near-site clinics. It had about 100 employees across the country, as well. Derek Boyce and Ryan Sommers founded Interra in 2001 and originally provided workplace chiropractic and physical rehabilitation services.
Both companies had shown their ability to adapt over time and refine their missions. All four owners planned to stay involved in the merged company.
The trick was the integration: making the decisions on who would do what, where the company would be based, which name would be retained, how the cultures would mesh, and myriad other decisions that would guide the direction of the new entity.
Tammie Miller, managing director at Milwaukee investment bank TKO Miller, works with business owners as they prepare to close on mergers and acquisitions. When it comes to the integration, she said the first things to address from a culture standpoint are who is leading the organization and what it will be called.
“It’s … unlikely that any transaction, especially a merger, is not going to have some component where ego plays a role,” Miller said. “The name, the leadership and all those kinds of things.”
Larger firms often have in-house integration teams, and consultants sometimes assist smaller firms with the specifics of the integration, Miller said.
The new entity took on the Healics name, and over the past year has worked to sew the companies together with Plough serving as chief executive officer of operations and Naparalla as CEO of sales and marketing.
“If we said there were no challenges, we’d be lying,” Naparalla said. “Our number one struggle was trying to help the staff understand that this merger was a good thing.”
“Anytime you’re bringing two companies together, going into this, you have to know that processes and protocols are different and you have to review and look at each one and pick the best practice,” Plough said. “There really hasn’t been any surprises that we didn’t anticipate.”
The leader must communicate early and often with employees about how the merger will impact them, Miller said.
“Employees, when they hear news of a merger or acquisition, focus on a couple very specific things: one, they want to know that they have a job, so if there’s redundancy in an organization, they’re going to be nervous; they care about their pay, and they really care about their benefits,” Miller said.
“I think the communication was key and communicating with the employees on a regular basis, making them feel as secure as we could possibly make them feel as we were working through the adjustments in the merger itself,” Plough said.
There was some turnover, which was to be expected. The norm is about 33 percent, but Healics only experienced 17 percent, Plough said.
“In that 17 percent that happened in the merger year, we also had people retiring, women…who quit to start their families,” Plough said. “In the exit interviews, we found out there was fear that their position was a duplication and so they wanted to secure a job in case theirs was the one that was let go. It was constant communication with our staff, letting them know each step of the way what we were working on.”
Both Interra and Healics had about 11,000 square feet of office space housing about 40 employees at their headquarters – Interra at 1675 N. Barker Road in Brookfield and Healics at 8919 W. Heather Ave. in Milwaukee.
They considered opening a new office or adding more floors to Healics’ office. One year in, they are undertaking an effort to move all the employees under one roof by combining Milwaukee operations at the Healics office to provide continuity and mesh their cultures. About half of the Brookfield staff has made the move, with the goal of having everyone in one place by the end of the first quarter.
“We have gotten very creative with our workspace,” Plough said. “In addition, Healics is very open to employees working remotely. We just don’t want to jump into (expanding the building) right now before we settle in to our growth and our needs.”
Healics now has about 600 corporate clients, including Blain’s Farm & Fleet and Trek Bicycle Corp., with about 200,000 participants. In some cases, both Healics and Interra had been working with a client so they could streamline those operations and offer the same services via one vendor. There’s also some opportunity for cross-selling the expanded services to each company’s client base.
The portion of the integration that has yet to be completed is the merging of technologies, platforms, processes, policies and procedures, Plough said.
“It’s a lot of moving parts and a lot of details to consider and things have to be thought through and what affects each and every department before we can finalize,” she said.
With the integration, Healics can offer its participants a portal that tracks their health and provides incentives for smoking cessation, hydration or other positive health steps.
So far, Healics has seen 10 percent growth as a result of the combination, which brings primary care clinics in line with a wellness program, Naparalla said. Healics has added 29 new wellness clients since the merger.
“We’ve got to provide not only electronic options, but we’ve also got to provide on-site options. What’s driving our growth is that we do offer that all in-house now,” Naparalla said.
As a result of the growth and to prepare for its wellness usage spike in the fall, Healics plans to add 40 to 50 employees by August, Plough said.
Overall, the integration has gone well, they said.
“It’s been a very positive experience,” Plough said. “We had four CEOs coming together, down to a co-CEO run company, and we couldn’t ask for a better partnership with all the partners involved.”
A similar merger of equals that Miller advised on was the merger of Waukesha-based Safway Group Holding LLC and Kennesaw, Georgia-based Brand Energy & Infrastructure Services Inc. last year. The companies formed an integration team to combine the operations, and took a middle path on the key facets.
The company is now called BrandSafway, which gave equal weight to the previous names. The headquarters is in Georgia, a nod to Brand, while Safway president and CEO Bill Hayes runs the company, a nod to Safway.
“For a merger to really yield results, you have to be open to taking ideas that aren’t yours, which is hard for a lot of people,” Miller said.
