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Leveraging Sales & Marketing To Maximize The Value Of Mergers & Acquisitions

Jun 8, 2008
Revenue growth continues to be a key goal of C-Suite executives with many turning to mergers and acquisitions to support their strategic agendas. While the acquirer's top-line traditionally benefits from revenue growth in the first year after acquisition, few companies have been able to achieve sustained increases in revenue growth in the subsequent years.

One example of companies' inability to get back to pre-merger revenue growth rates is the acquisition made by an established leader in the outsourcing arena of a fast-growing start up. On paper, this deal should have changed the industry dynamics and created a "one-stop-shop" for outsourcing deals, generating additional revenue for the combined company.

In reality, two years after the deal announcement, the acquirer was struggling to stay competitive after posting a significant year-end loss and with its stock price falling. The acquirer admitted to having underestimated the complexity of taking on a large number of new contracts in a short period of time and miscalculating the cost of executing them.

This,combined with the loss of confidence in the new organization, led to negative sales growth for the first time in the company's history and a decrease in sales growth from around 16 percent
growth two years before the deal to around -1 percent sales growth two years after the deal.

There are numerous reasons for these growth challenges. Chief among them is a tendency among acquirers to become inwardly focused on integrating their new acquisitions, and they lose sight of the need to retain and grow their customer bases. All customers will be impacted by a merger. The key is to understand how. A clear strategy that focuses on reducing customer disruption, communicating changes timely and accurately, and developing robust retention programs for profitable customers, is essential to successfully managing customer expectations. The benefits are well worth it. Companies can experience:

* Satisfactory retention rates for customers and employees.
* Market stability
* Informed customers who act predictably during the integration.
* High level of excitement on the part of the customer that can lead to even greater loyalty.

Successful companies use mergers as an opportunity to discover untapped revenue potential by optimizing cross-selling and rationalizing channels, products, pricing and overall marketing efforts. This can be done if companies understand their new pool of customers - their segmentation, preferences and behaviors.

Not only are customers at risk during integration, maintaining high-performing employees could also be at risk if staff retention is not managed properly. To help reduce these risks, company executives must also win the hearts and minds of client-facing employees, leveraging them to keep customers at ease. In addition to a motivated salesforce, the right tools and messages to communicate with customers can be crucial in maintaining and growing the customer base throughout the integration plans. Engaging leaders from both organizations, developing fair and effective financial incentive plans, and creating and clearly communicating the integration plan are also key to successful integrations.

Companies that put the customer first, successfully equip employees with the right tools and messages and mine their customer databases to drive profitability can succeed at generating post-close revenue growth. Accenture has been involved in up to 400 M&A deals over the past five years and is a leader in providing sales and marketing support. Given our experience, we understand what it takes to help increase the growth opportunities of mergers and acquisitions.
About the Author
Accenture's Electronics & High-tech industry group offers management consulting, technology-strategy and implementation services to all segments of this exceptionally dynamic industry. Read the full article on Leveraging Sales & Marketing to Maximize the Value of Mergers & Acquisitions . Send an email to Patty Crawford (patricia.l.crawford@accenture.com) if you would like one of our pricing specialists to meet with you.
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