Protecting Revenue and Driving Growth in M&A
Recently several CEOs have remarked to me that their biggest concerns about an impending acquisition or merger is losing sales momentum. While potential cost synergies get most of the attention, in highly competitive industries, losing sales focus for a couple of months can cause a downward spiral in revenue (and profits) that is difficult to halt, putting the whole deal benefits in jeopardy.
Without a doubt, the M&A process creates a period of time where the organisations involved are inwardly focused. However, once a deal is in play it is vital for CEOs and sales leaders on both sides to concentrate on their customers and put strategies in place to keep their sales teams motivated and performing.
Strong leadership is essential to ensure that the most valuable customers, sales and service staff are not lured away by the competition, who are likely doing their best to sow fear, uncertainty, and doubt about the impact of the deal. Focusing on those qualities that are particularly sensitive to customer retention, such as ease and speed of service, peace of mind, consistency and reassurance are more important than ever.
Once the deal is done, uniting sales teams is a big challenge that is highly visible to others inside and outside of the organisation. There can be considerable competitive ego involved, significant differences in remuneration policies, and sometimes opposing ways of working. In some cases, sales teams that have been bitter rivals for years are suddenly expected to work happily together in the interests of the customers and the company.
It is not an easy transition; emotional costs are high, which impacts on performance, engagement and ultimately financial results.
According to a recent M&A Capabilities Survey by McKinsey, more than a third of companies fail to achieve their revenue goals after a merger. Interestingly, more than half the respondents put that failure down to a critical gap in sales and marketing merger capabilities within their integration teams. We've noticed that integration teams often lack the "voice of the customer" and fail to put sufficient emphasis on the customer when making important decisions on operational factors.
McKinsey suggests seven key activities to help companies protect existing, and drive new, revenue, which I have paraphrased below:
1. Establish a commercial integration management office, staffed with your best players, who are accountable for the integration effort
2. Identify sources of value and validate the deal model to set realistic targets
3. Gain the commitment of senior leaders and establish clear roles and governance
4. Preserve and protect existing revenue by moving quickly to provide certainty and clarity around the responsibility for customers and territories
5. Invest in clear and effective communications to staff and customers
6. Retain your top sales talent as a priority
7. Actively address cultural differences that truly have an impact on the value at stake and at risk
M&As are about creating more value and revenue synergies can obviously deliver significant benefits.
Creating customer value and keeping the sales momentum is discussed in chapter six of my book “Avoiding the M&A Failure Club”. If you’re an executive responsible for the success of your next merger or acquisition you can click here for a complimentary copy.