A Playbook For M&A Growth
M&A can accelerate growth and expand capabilities, but capturing growth opportunities requires both detailed planning of strategic growth priorities and investing in execution teams.
Mergers and acquisitions (M&A) can be a powerful catalyst to ignite growth and expand new capabilities to win in the market. However, the complex challenges that encompass M&A integration often result in what most studies cite as between a 70% to 90% rate of failure to deliver on its expected value. In any size deal, the implications of failed M&A can be significant including lost customers, talent leaving, and material cash flow losses. During the fast-paced integration process, teams often focus their attention on integrating cost synergies and miss opportunities to capture growth. In a Deloitte study, only 27% of acquirers were able to help a company grow faster than its historical rate and industry peers.1 To ignite growth, it is critical for teams to focus on creating an immediate post close and long-term growth playbook that outlines sales execution planning and enhances the impact of the teams that will be responsible for delivering the results.
M&A Growth: Strategic Opportunity Planning
While M&A deal models nearly always include revenue growth, the reality is that without a clear, actionable plan, customers are at risk and sales can quickly begin to deteriorate. Capturing growth requires defining opportunities, establishing a combined go-to-market roadmap, and creating a customer transition plan.
Define prioritized growth opportunities
Clearly link deal model growth to specific opportunities that are quantified and prioritized based on impact, timing, and probability of success. These growth opportunities should cast a wide net of possibilities that leverage the strengths and assets of the newly combined company including new customers and geographies, shared distribution channels, salesforce effectiveness, pricing strategies, etc. In the planning phase, determine quick win opportunities, often through cross selling and up selling, that will generate momentum across stakeholders.
Establish a combined go-to-market roadmap
M&A can significantly enhance go-to-market capabilities because of new technology, products/services, distribution networks, and customer experiences. Establish a winning go-to-market strategy that effectively utilizes the new strengths and capabilities of the combined company to execute on the defined growth opportunities. Then, align newly integrated cross functional teams and their reward structures to execute on bold targets with clear goals and high impact KPIs.
Create a customer transition plan
Customer relationships are one of the biggest assets purchased in a transaction. Once the deal is announced customers will wonder how their business will be impacted; even small changes can negatively impact key relationships. Enable customer readiness by creating a clear communication plan that incorporates new brands, products, pricing changes (or bundling), account representative changes, and processes, and how they will benefit the customer. Before the deal closes, the most profitable customers need to be prioritized for coverage and communication. Communicate early and often to identify and address any customer concerns.
M&A Growth: Invest In Execution Teams
Your people are at the core of transaction success. If those within your newly combined organization who are impacted by the deal do not adopt the change, then performance will decline and engagement will drop. Developing leaders, engaging the frontline, and nurturing team culture will help align teams, improve skills, and better enable successful execution of the growth playbook.
Grow your leaders in an aligned direction
Growth strategy is more quickly realized with high quality leaders that are aligned with the same mission and vision. Choosing a leader model that serves as a framework for what leadership looks like will guide all levels of management and be critical to grow teams towards a common goal. Leader models incorporate the mission, strategic values, and capabilities of an organization – without one, leadership will be defined differently across the organization and the difference magnified by merger activities, sometimes resulting in conflicting behaviors. Evaluate target leadership strengths and opportunities and develop strategies to help leaders move from where they are, toward the expectations of the new leadership model.
Create brand ambassadors on the frontline
When a transaction is announced, the frontline team will exhibit a mix of emotions that can negatively impact performance and engagement. Many times, the frontline is now selling a brand or product of a former competitor. Intentionally communicate with and engage the frontline to create a powerhouse of brand ambassadors and vision carriers who love executing your strategy and making a difference.
Strengthen a unified team culture
Misalignment of culture is a common reason that M&A transactions fail. Culture is multi-faceted, from company values, to ways of working and best practices. When combining new teams we often hear change resistant phrases such as, “Well we’ve always done it this way.” A lack of cultural cohesion can hinder teams’ abilities to effectively combine the strengths of both organizations. Aligning team culture requires a comprehensive approach that includes an assessment and understanding of both cultures, and a prioritization of work that will enable teams to go-to-market with a common method, vision, and mission.
Investing resources in creating the detailed growth playbook at the front end of the M&A process will benefit the entire life cycle of the transaction, resulting in long term sustainable growth as teams successfully capture opportunities that are aligned with the deal and company strategy.
ABOUT THE AUTHORS
David Floyd is a Senior Consultant at BrightOrg Services.
Joel Nickelsen is the Founder and CEO at BrightOrg Services.
Reference source:
- “Growth through M&A: Promise and Reality”; Deloitte Review; https://www2.deloitte.com/content/dam/Deloitte/global/Documents/Mergers- and-Acquisitions/gx-ma-growth-promise-and-reality-021915.pdf
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