Companies seek to accelerate revenue growth or enter new markets through mergers and acquisitions. They spend a lot of energy and resources identifying the right targets based on synergy and combined financial models.
But oftentimes, the real value of the acquisition is not realized. M&A typically fails during integration. All that effort and capital spent on acquiring the target is wasted.
In the area of Sales & Marketing, the acquiring company needs to identify the critical issues prior to the closing in preparation for “Day One.” Day One is an important milestone and should be well coordinated. It’s the best day to communicate to employees, the sales team, vendors and customers (in that order). My motto is always: “If you don’t communicate what is happening right away, they will make stuff up – and that’s always worse than the real story.”
At the heart of the merger is the story…not as stated in the press release, but as interpreted by existing and potential customers. What is the resulting value that the combined entity should contribute to the customers’ experience? Delivering this value should guide merging companies on 1) Marketing messaging and Alignment, 2) Sales Organizational Structure, 3) Go-to-market solution planning, 4) Channel Partner and Vendor Programs, and 5) Sales Incentive Plans. (There are a thousands decisions that must be made, but these are 5 of the most-critical). The Day One messaging must include compelling statements to provide assurances, generate enthusiasm and hope, and keep nerves subdued.
Marketing Messaging and Alignment:
What value is in the acquisition for current and potential customers? The combined entity is doomed to failure if an acquisition doesn’t create a 1+1=3 scenario. So, it starts with the messaging that will shape the picture in the minds of customers, partners, employees, vendors, and the marketplace.
Day One messaging must include a very clear, credible, and compelling market promise. Acquisitions are a very anxious time for all stakeholders. And, this is no time for “good enough”. If the market promise is unclear…well, as they say, “if you don’t know where you are going, any road will take you there”. If the market promise is clear, everything else below is easier to create. So, take the time and be thoughtful here. If you need help, go and get it. And, get it long before Day One.
Sales Organizational Structure:
Are we merging sales leadership by identifying the best talent or are we subordinating the target sales team under our sales leadership? Either approach has merit, but it requires leadership and clarity at the highest level. The Market Promise will be a strong compass when making decisions on who will lead and the desired, resulting culture. Again, this is where an experienced (TechCXO) integration leader can be critical.
Many companies put off this crucial sales organization integration decision until days or week after the closing, creating disruptive sales force confusion which can lead to sales “stars” exiting on both sides. (I have worked on mergers, where the issue is never addressed by the leadership and left to the sales management to battle out – this is not a good approach.)
We recommend absolute clarity in announcing sales leadership during Day One, then including the sales leaders of both companies in the Integration Steering Committee.
Channel Partner and Vendor Programs:
Acquisitions are an especially anxious time for Channel Partners, Vendors, and anyone else (like a sales professional) who has an established territory. These stakeholders will defend, and rightfully so, the significant investments they made in the past and relationships they have established. When the merged entity depends on these stakeholders, navigating how future territory lines are drawn can be a political power struggle.
The Market Promise and strengths and weaknesses of these stakeholders will determine their ultimate role in the delivery of the expected value. And, many of these discussions and decisions can’t be made prior to Day One for reasons of confidentiality. Communicating to the critical Partners and Vendors is critical.
Sales Incentive Programs:
When acquisitions happen, sales professionals get nervous. And, most Sales People…hate change. The perception is that their job, their established customer base, and their opportunity to earn is all in jeopardy. In most cases, few promises can be made on Day One to quell these nerves. I’ve always said that the sales incentive plan drives the sales culture.
Fortunately, the acquisition integration risk in the area of Sales & Marketing can be greatly reduced by bringing on the right leadership. The partners at TechCXO specialize in being an acquisition integration lead executives. We can help you make a successful acquisition by providing hands-on, experienced on-demand executives who partner with the C-Suite, board and stakeholders to ensure the integration is given the leadership, skills and experience required for a successful merger.
Next, we will look at technology integration.
Matt Oess (full bio) are partners in TechCXO’s Atlanta office.