mergers and acquisitions

Acquisitions and Mergers: Make 1+1 equal more for your B2B company’s revenue growth

In order for an acquisition and merger to be worth the investment, executive leadership needs to see substantial growth in an appropriate and agreed-upon timeframe.

And substantial growth does not equal the sum of the two company’s previous year’s revenue. This expected growth means doubling, tripling, quadrupling — scaling to a revenue level neither company could have achieved alone.

Mathematically it would seem your company has an upper hand after your M&A by means of a larger sales force, with more solution offerings, with more value and more differentiation than ever before. Yet, for any of these “justifications for the M&A activity” to materialize and make a positive impact, leadership must first do the heavy lifting of developing a single, strategic plan to lead the newly united company toward this shared goal.

A Joint Value Proposition

While many companies eagerly start consolidating human resources, accounting, Information technology and other back-office functions to gain expense efficiencies, they too often fail to align beyond that on the revenue performance side of the ledger. It may be a lack of time in the short-term. It may be that everyone thinks of this as a long-term, “we have time to get to this later,” sort of alignment. And leadership might look at their respective teams and decide they have been doing well in the past. Why shake the boat? Why risk failure?

A greater risk, though? Not making a substantial impact in the marketplace when it comes to your revenue performance. And one of the first things companies should address is developing a new joint value proposition.

You now have a higher position to which you can lay claim. You will have new buying audiences whose doors are easier to knock on after this M&A. A joint value proposition will formally spell-out in a relevant, comprehensive, strategic way how your two companies can best serve these specific buying audiences in a way you were unable to do before the combination.

A Singular Sales Methodology and Sales Operations Governance

Maybe your company’s sales cycles take months while those of the company with which you are merging take a couple weeks. Regardless if you think your sales teams compare as well as apples to cucumbers, you must make an effort to operate under the same foundation as one. Sales processes and sales operations frameworks cannot and do not need to line up 100% but there needs to be commonality in sales nomenclature, methodology, operational discipline and governance.

Territory Realignment and Mapping

We have learned in math class the rules of numerical equations from an early age. Two plus two equals four. Four is a greater number than two. And we take that thinking and decide that four must be better than two.

This same “larger number equals a better number” logic does not always apply in business, though — especially when it comes to your sales force.

If your two $20 million companies wish to become one $60 million in revenue over the next three years, there must be more to your strategy than doubling your sales team. Look to the details of how you reached your $20 million revenue in the first place. Look at the market that got you there, where that market is heading. Look at the territories in which your salespeople sell to. Look for opportunities to up-sell and cross-sell your new additional capabilities.

Just because your sales team and those who support them have grown in size does not mean your revenue streams will follow suit. Not without a proper situation analysis and in-depth strategy to map out the next three years of transition.

This strategic planning can feel burdensome and overwhelming at the start of an M&A, but it is important to push through in order to win. Sometimes engaging a third party partner makes all the difference. 

For more proof of mergers and acquisitions best practices, I invite you to read the success of past Mereo client Ariba.