Making M&A Payoff Part 3: Deal is done, but it is not over...
You've secured the private equity funding. You've run the numbers about how this acquisition or roll up strategy will grow revenue in the overall business. You've decided that the acquired brands will be retired or rolled under your existing or new brand name and in terms of goals you've added together the P&Ls of both firms plus growth for the new year.
You've closed the deal and announced it to the market. It's complete. right?
Oh ho no! It has just begun. To deliver on those promises of exponential revenue lots of moving parts have to be pulled together:
How can you mitigate risks to revenue and customer retention?
Our experience in helping acquiring companies with billion dollar acquisitions reach their goals center around these seven tips.
“Rebrands are likely to yield long term value ... BUT only with consistency and good execution.”
Take enough time This may seem counter intuitive to the go-go world of tech startups and their investors but all the big (Deloitte, KPMG, Bain, Brand Finance) and little guys (Brand Transitions :-) in this discipline will tell you the same thing. People need time to get used to change. Implementing thoughtfully gives everyone (customers, employees, partners and acquiring firm) more time to digest the change. It may even cost you less to implement the change slowly. Done right, it will certainly help you retain more customers, key personnel and partners. Realistic timelines enable the following:
C-suite and board level complex decision making about what products to keep in the portfolio, where to invest precious resources, revised go to market strategy, and what to retire and when;
Formulating and gaining consensus on the new brand story, plus bringing all employees along on this journey (teambuilding exercises, new messaging training, revamped internal and external comms);
Acquiring company business units need time to ingest new people and processes without negatively impacting the customers (think CRM, invoicing, email and document collaboration, sales and marketing enablement, etc.) and perhaps most importantly...
Sales territories, portfolios by team and commissioning strategy.
2. Be customer centric. Create timelines that align the maximum amount of change in one step so that it can be clearly and repeatedly communicated effectively to your most important asset - the customers you just acquired. Also remember to communicate (well and often) the larger brand value story to your existing customers and how this acquisition benefits them.
3. Bring employees along on the journey. They are your brand ambassadors who will influence how your customers, your partners and the marketplace feel about you. Don't make them an afterthought. The acquired customers trust those acquired employees to tell them the truth and you want it to be a positive story.
4. Rationalize product portfolios, lead generation and sales territories early as these decisions will take the longest time and require careful consideration. Often sales cycle timing (end of quarter, end of year, sales kickoffs) will also impact your integration timeline. Factor these in from the beginning to ensure you don't hit your newly acquired customers with changes that are not aligned with answers about how this will affect them.
5. Consider how much your infrastructure can digest at any one time. If you are executing roll up strategies with many acquisitions, don't forget that this complexity will hit resource and risk roadblocks. And any brand change doesn't affect just the marketing department. e.g. Lawyers have to rationalize and update contracts, product and privacy terms to keep on the right side of the law. Finance teams often need to rationalize invoicing processes and systems, office space commitments, international licensing. Sales and Ops need to rationalize CRM, sale enablement, partnerships and marketing automation systems to enable cross sell. Add to this complexity, any high growth organization's typical roadmap of system upgrades and you add even more milestones to work with or around.
6. Set goals beyond short term revenue growth. Consider important long term factors such as customer and sales partner retention, key employee retention (especially if this is a talent acquisition), net promoter scores, etc. Unfortunately M&A timelines are often driven by how fast an acquisition can be considered "done" because of the limitations on how long a firm can write down acquisition costs and investor pressure for cost cutting efficiencies. Smart companies plan and incorporate the long term growth into the equation. Done wrong, short term revenue is eroded because employee retention plummets (and it is always the good performers who go first), mistakes are made (e.g. system integration failures) and those mistakes negatively impact the customer or prevent growth or cross sells, and competitors swarm in to pick off your customers and employees. Done right, brand values can be enhanced, cross selling can be rapidly additive to the bottom line, and costs can be reduced while leveraging best of breed approaches to the business.
7. Hire a brand transition specialist to guide you through the best practices, risk mitigation and make strategic recommendations along your rebrand timeline. Often this role can save you millions in external costs and help you create a strategic plan that focuses on optimizing both your long and short term revenue goals.
Experienced a good or bad brand transition in the past? Would love to hear about your experiences in the comments!