Making M&A Pay Off (Part 2 of 3)
In Making M&A Pay Off Part 1 we explored the importance of product and revenue synergy in any type of brand transition. Overestimating revenue synergies was the most cited reason for acquisition deal failure among the 281 executives surveyed by Bain & Co in this recent survey. In this 2nd part we explore what tactics can be used to mitigate this risk.
Post-acquisition, deal teams often hand over the transitioning activities exclusively to finance and operations. Our experience tells us that this approach leaves large gaps in the effective transition of customer brand loyalty and talent retention. Without a focus on customers and brand, organizations are missing a huge opportunity to transfer brand equity from the acquired companies’ customers to their own brand. Without a fully baked transition plan that has the customer (and by default the sales teams) at the center of the transformation, acquiring companies risk missing their revenue goals, losing customers and talent which is counterproductive to why they acquired the company in the first place.
Chart of top reasons for M&A failure
Our experience says effective transitions tend to have three common denominators:
1. A brand transition governance framework and a strong program manager focused on transitioning the brand and all its customer touchpoints
2. Alignment around a logical transition plan with clear milestones that bundles up all the customer changes into 1-2 impacts and helps everyone understand what is happening.
3. Done right, well executed strategic communications help connect the dots between acquired brand and acquiring brand and brings the customer along on the journey which enables (new) brand loyalty. (Too many, not enough or disjointed communications leads to customer churn. Customers will rightly decide that this is an opportunity to shop for an alternative now that their brand has been purchased by another company they don’t necessarily trust.) Similarly, an internal communications plan tells the employees that they are valued and what is planned for their customers. It helps employees articulate, to themselves and their customers, the new larger value proposition within the combined company resources.
What does your experience tell you? Please post your comments below.