Maintaining sales momentum after mergers and acquisitions (M&As) is critical if providers want to achieve desired results, but many struggle to do this in light of the new technology buying cycle, according to Gartner. Sales and marketing leaders from both companies in the transaction must proactively engage a broad constituency to capitalize on opportunities and prevent competitive disruption.
“The job of selling technology is already more complicated for a number of reasons. Provider salespeople, especially those selling more complex and/or higher-value solutions, already deal with the realities of the new technology buying cycle,” said Todd Berkowitz, Research Director, Gartner. “Adding the complication of an M&A event to this already disruptive buying cycle shift can make a difficult job even harder, especially if acquisitions are larger or are likely to force salespeople to go out of their comfort zones to be successful.”
While M&A events can fail or succeed for many reasons, maintaining sales momentum, especially in the crucial early stages, can have an outsized impact on long-term success. During the due diligence process, key leaders are “read in” to the proposed transaction. The number of people involved is necessarily small due to the need to keep things confidential.
While the head of sales and the chief marketing officer (CMO) are critical to this process, they are, by design, further removed from the prospects and customers and cannot offer the perspective that comes from either the salespeople with direct relationships with customers and prospects or the product marketers that support those salespeople.
While still keeping the number of participants to a manageable level, providers need to expand beyond senior management. It is important to identify the top performers from sales and marketing from both parties involved in the transaction, especially the ones who have been with their respective companies for a long period of time and those who have been through similar M&As, and give them at a seat at the table.
During the earlier stages of the due diligence process, they can advise on how the M&A will impact market dynamics as well as existing relationships. As due diligence processes and the transaction get closer to being announced, these top performers can assist with the initial rollout and communications strategy.
The primary output of these strategy meetings should be a plan to cover the first 90 or 100 days after the announcement. The communications plans for both sales and customers should be created during this process. Creating a plan for the first 100 days forces providers to think beyond just the initial announcement and keeps the focus on a set of activities to maintain momentum.
After a merger or acquisition, there is a natural desire to get sales organizations integrated as quickly as possible, especially for publicly-traded companies. In theory, the faster the sales forces can sell each other’s solutions, the more quickly revenue goals can be achieved. But in reality, faster does not always mean better, and in some cases, the risks significantly outweigh the benefits.
“The changing buying cycle and necessary adjustments in selling successfully in this cycle is another reason to take this process slowly. Time is needed to ensure synchronization between the buying and selling cycles, and extra time is needed to do this properly when newly acquired solutions are added to the mix,” said Berkowitz.
“Providers on the acquisition side of the transaction should spend time looking at the sales model of the company they acquired and determine if there are some elements worth adopting into their own sales process. A rushed sales integration makes it much more difficult to take advantage of this opportunity,” added Berkowitz.
While the top sales performers are generally more capable of dealing with the change and uncertainty brought on by the changing buying cycle as well as the M&A event, they are the ones more likely to leave the company in the short term. Due to the expected demand for their services, they have the luxury of not having to bother with any added “complications.”
However, losing these “A Sellers” deprives the joint entity of its most valuable assets and increases the likelihood of failure. Given this reality, retention of these A Sellers from both companies must be one of the immediate and primary objectives after the deal closes.
Beyond including some A Sellers in the strategy planning prior to close, providers should employ these three strategies as part of their planning.
·Sales and executive management should reach out directly to the A Sellers and ensure their questions are answered, even while there is still some uncertainty.
·Minimize changes to account coverage, compensation and process in the early stages and ensure they are included in the longer-term discussions in these areas.
·Consider retention bonuses or other compensation to make sure the A Sellers remain on board for the crucial first year.
“The changing technology buying cycle and the corresponding shift in provider sales strategies to adjust to this reality has made life challenging for most salespeople. The list of challenges grows substantially aftera merger or acquisition, and providers need to take proactive steps to maintain sales momentum in these situations,” said Berkowitz.
“Providers can achieve next-level performance in this area by developing a comprehensive strategy that includes setting realistic timelines for sales integration; working to retain top performers; delivering targeted training on products, messaging and positioning; making the right content easily accessible; and communicating with customers on a regular basis in a meaningful manner,” added Berkowitz.