Top viewTop view of manager and employee doing teamwork in a business office, looking at charts on a laptop display. Finance paperwork with charts at the workplace. Discussing financial plan.
Welcome to our third post in our six-post series discussing some of the challenges associated with integration/combination planning and key considerations for CEO and Private Equity Sponsors looking to grow through Mergers & Acquisitions (“M&A”). Vector Advisory Services has created a complimentary M&A Integration Planning Tool to assist business owners and sponsors in evaluating and resource planning for key aspects of business combinations. Our first post previewed this 25-point assessment tool, which includes five critical elements across five common functional pillars, to help leaders focus and assess resource needs to successfully integrate a business. The second post centered on the criticality of getting the Human Capital, Leadership, & Culture pillars right – If the culture doesn’t work, likely the business combination will not either. This third installment addresses the Growth (Sales & Marketing) functional pillar and the five associated key elements:
- Sales Model
- Pricing / Rates & Revenue Synergies
- Sales Incentives
- Metrics & Reporting
- Branding & Marketing
Sales Model: Generally, a priority focus area during pre-close and within the first 30 days after close, the approach for managing sales relationships and communications to existing / priority clients should be instituted. Whether the combined companies decide to consolidate the sales organization structure or not, roles and responsibilities should be clearly defined as soon as practically possible. Training and awareness of capabilities including product and service offerings can be provided by both companies which also helps facilitate team introductions. Tools and technology (i.e., CRM, Quote to Cash platforms, etc.) leveraged by both companies should also be identified and explored to determine the best integration approach for the combined company (interim and long-term solutions). Further, delivery channels and delivery partners are critical components as well. Lastly, never underestimate the power of communication – customer communications effectively articulates the story of the acquisition and ultimately the benefit to the customer or client is extremely impactful. Demonstrating an ability to win new work collaboratively between the two companies is often the best way to generate further buy-in and validate the opportunity for both companies’ employee basis and generate momentum behind the combination as a whole.
Tip – Ensure alignment is achieved regarding regions, territories, and client/account ownership. This is particularly beneficial for those companies that have overlapping or shared regional/territorial coverage, and/or share clients. Any impacts to previously established bonus, commission, or referral incentive plans should also be revisited to help promote cross-sell and collaborative approaches to the combined sales model.
Pricing / Rates & Revenue Synergies: With the overall goal of driving cross-selling opportunities of new capabilities and expanded offerings, initiatives should be established to achieve the target revenue synergies. Complete product and service harmonization may not be achievable; however, the exercise of understanding the full scope of product and service offerings along with relevant pricing and rates may lead to harmonized pricing and discount standards.
Tip – Establish a “quick-hit plan of attack” for priority clients, and ensure appropriate monitoring is established for pricing and discounts across the combined organization. Continue to enhance and evolve the pricing strategy in consideration of monitoring results.
Sales Incentives: Sales incentive plans vary across organizations; thus, a consolidated sales incentive plan for the combined organization is recommended, if feasible. It’s important to understand every nuance of existing sales incentive plans to help ensure the enhanced consolidated plan remains impactful and rewarding for those with meaningful performance. Any changes to sales incentive plans must be effectively coordinated and communicated (e.g., likely in-person/virtual rather than email) in and timely manner (e.g., sooner the better).
Tip – Don’t lose sight of the distribution/timing of sales incentives. While considering enhancements to the sales incentive plans for the combined organization, also review the timing and frequency of sales incentive distributions. For example: (1) Monthly, Quarterly, Annually? (2) Payment this month for last month’s sales? Also, include distinct language to incentivize cross-selling.
Metrics & Reporting: How effective can the Growth function be without effective reporting? Critical milestones and priorities should be established to determine the central and single “source of truth” for all sales data. There may be interim solutions and/or workarounds with manual components and consolidation during the early phases of integration; however, the final state solution should be clearly vetted with distinct tasks identified with corresponding timelines and drive the combined company to standardized reporting. Key performance indicators and metrics should be standardized with established data definitions to facilitate consistency. Consolidated and standardized reporting and metrics will support the effective evaluation of the combined sales organization.
Tip – Review/showcase existing dashboards, reporting, metrics, etc. from both companies with the established integration team to generate collaboration and collectively create the most impactful and meaningful future state metrics and reporting.
Branding & Marketing: Combined capabilities should be quickly assessed and coordinated to ensure consistent messaging both internally and externally. Internal communication, including training and awareness, is helpful to build employee morale, increase buy-in regarding the integration efforts, and jump-start the identification of cross-sell opportunities. Further, the go-to-market strategy is largely dependent upon the understanding of the combined capabilities, including potential geographic implications. Website updates including references to the combined companies also help generate visibility and can be leveraged to highlight associated customer impacts and benefits.
Tip – Ideally the branding strategy is determined pre-close to help facilitate any speedy / time-sensitive tasks, such as signage updates, if applicable, vs. longer-term branding changes.
Defining the vision of the integrated state for each functional area is critical and it should be outcomes-oriented. The following is a set of example outcomes or priorities that your team may consider, revise, expand, and tailor as it relates to the Growth (Sales & Marketing) pillar.
- Identified priority clients, existing clients, shared clients, and potential clients (e.g., pitching, pipeline) and immediate plan for growth developed (within the first 30 days)
- Established longer-term plan for growth/cross-sales (> 30 days through 12 months)
- Consolidated tools and solutions, including metrics and reporting
- Consolidated organizational structure (business development, sales, marketing, etc.)
- Aligned and harmonized sales incentive plans
- Delivered / Received capabilities training and awareness (to be provided and received by both companies)
- Aligned branding, marketing, and communication strategy and execution
We thank you for your interest in our series, and we’re looking forward to hearing your thoughts about any additional Growth (Sales & Marketing) critical integration activities. Stay tuned for additional posts regarding the remaining functional pillars included in Vector Advisory’s M&A Integration Planning Tool. You can also download and use the tool for yourself on our website.
Contact us with any questions and for more information about Vector Advisory’s services.
- Part I – Overview of Vector Advisory’s Integration Planning Tool
- Part II – Human Capital, Leadership, & Culture
- Part III – Growth (Sales & Marketing)
- Part IV – Operations
- Part V – Technology & Systems
- Part VI – Finance & Administrative
- Recap