There is a core component being missed in most M&A strategies
An overlooked strategy missing from most M&A activities
If you are reading this, then certainly you have seen metrics on merger and acquisition (M&A) activity that has been published over the last 10 years:
· 83% of M&A activity failed to unlock new value
· 53% destroyed value
More recently, in his Harvard Business Review article, Roger Martin endorsed the rule confirmed by nearly all studies that “typically 70% to 90% of acquisitions are abysmal failures.”
So why is does this keep happening?
I believe it is a failure to recognize the critical employee engagement below the leadership team level. Senior Leadership and third parties like Private Equity and Investment Bankers (if involved) get enamored with the deal points and synergies. It’s not that there isn’t a lot of due diligence, I just believe not enough scrutiny is applied to the sales organization and revenue sustainability.
The sales community (sales & marketing) has both internal and external perspectives. They are first employees living the changing organization and second, they get their buyers perspectives as they sell and service in their marketplace. And you can bet their competition is ghosting them trying to take advantage of the disruption.
Key Challenges:
· Seller engagement – if the sellers disengage with ambiguity or fear this can impact performance directly and can impact customers and prospects indirectly.
· Lack of experience - Sales leaders may lack the prior experience or support needed to execute successfully.
Recommendations:
· Manage the human side of change for employees - Prioritize employees over customers in terms of communicating to mitigate the risks of sales employee attrition, lost revenue and missed opportunities.
· Pick “low hanging fruit” “quick wins” over longer-term strategic planning that might take months to sort out. Explore the relevant value creators i.e., cross-selling/upselling, new territories.
· Create a culture of collaboration, not an acquisition culture of “we’re the winners” by engaging employees in change management planning through focus groups.
First things first/Communications:
1. Create a vision – likely you won’t have all the details worked out, a vision will help relieve uncertainty and build (or sustain) leadership credibility.
2. Demonstrate empathy, “ask don’t tell”— let the sales community know you understand they are going through a potential disruption and probe for unintended consequences. This will strengthen loyalty, create discovery of pitfalls, and show that key groups are not being forgotten.
3. Be proactive – address concerns and don’t duck the issues even if you don’t know all the answers. Changes are a distraction and can be temporarily harmful to the team if not dealt with.
In our work at Certeza we’ve found it is worth the time to do a quick assessment and audit of the sales community and culture. Once completed (usually 3-6 weeks) management will have a much better picture of what some quick wins look like as well as a roadmap to the future state organization. This small investment brings a level of “certainty and precision” in transitioning companies into high revenue growth organizations.
We typically use a workstream approach involving all the Key Stakeholders.
Jim Greenway is a founding partner of Certeza Consulting Group with a strong passion to share his expertise and knowledge to help Private Equity and their portfolio Senior Executives across many industries drive excellence and accelerate growth with sustainable revenues for their sales teams.
Prior to CCG, Jim worked at Lee Hecht Harrison as the EVP of Sales and Marketing where he co-designed and implemented a global sales process and methodology that delivered an impressive and consistent 80+% win rate in a highly competitive market
His other passion is Freedom Dogs, a nonprofit organization that pairs dogs and trainers with wounded warriors.
Connect with Jim: https://calendly.com/certeza-consulting
