Making M&A Pay Off (Part 1 of 3)

This blog is a cross posting of an article originally published on LinkedIn on June 2nd, 2022.

Show me the money! As deal valuations skyrocket, making acquisition investments pay off becomes increasingly important, especially for SaaS software or technology companies who are acquiring for growth.  In that vein I recently ran across these insights into mergers and acquisitions by Bain & Company which rightly points out the importance of revenue and product synergy (or alignment) as a critical element to deal success. 

Bringing Science to the Art of Revenue Synergies | Bain & Company

Two intriguing concepts in this article grabbed my attention. 

First, the degree to which teams had thought through product integration upfront (or not) significantly affects the deal outcomes. @Brand Transitions has seen that play out in a number of brand integrations where product plans and roadmaps were slow to come to fruition thus affecting how quickly an integration could occur.

Second is the revenue synergy. How are these sometimes competing or overlapping offerings going to play with the customer base of the acquiring firm and of the acquired firm’s clients?  How quickly can the sales team be integrated and begin to cross sell or upsell across the now wider portfolio.  

Overestimating revenue synergies was the most cited reason for deal failure among the 281 executives we surveyed, yet only half of those executives said that they bake revenue synergies into their deal models. - Bain & Company

Intriguing concepts and as you might suspect, I think effective brand transitions can often mitigate these challenges.  I’ve got more to say on the subject. Stay tuned.